2021 – A pivotal year ahead for ‘Global Britain’

Article by Ben Judah and Georgina Wright

December 3, 2020

2021 – A pivotal year ahead for ‘Global Britain’

Ever since the referendum, Boris Johnson, Theresa May and other Conservative Party politicians have presented Brexit as the first step toward building a new ‘Global Britain’. As Johnson declared in a speech in late 2016, pointing to China, “as Global Britain, our range is not confined to the immediate European hinterland as we see the rise of new powers.”

But despite these promises, there has been little to no broader foreign policy debate in the country. Instead, Britons seem to have become caught between three temperaments. There are the catastrophists, who argue the UK will become irrelevant on the international stage as a result of Brexit; the nostalgics, who see a powerful Britain through the lens of a great colonial power; and the denialists, who refuse to accept that Britain must adapt to a changing global context. All are characterised by a surfeit of emotion and deficit of strategy⎯ and none have answers to the key questions their government must now answer if the UK is serious about remaining a global power.

2021 could go down in history as a turning point in British foreign policy. Downing Street hopes to finally have the capacity to deliver on ‘Global Britain’ and take it centre stage, with the UK chairing both the G7 and co-hosting the UN Climate Change Conference in Glasgow. The Government will publish a new national strategy, dubbed the Integrated Review, which will generate a roadmap of the UK’s long-term foreign policy commitments and priorities. And just last month, the Government pledged a £16.5 billion increase in the UK’s defence budget. But more needs to be done to make British foreign policy a success: it needs a long-term vision where it clearly sets out priorities and ambitions, and must ensure that it can deliver on them. This essay builds on the ideas set out in an earlier article co-authored for the World Politics Review.[1]

A realistic Britain

The UK remains an important player on the global stage. Despite low productivity, the British economy remains dynamic, as London has the highest concentration of fast-growing companies among cities in Europe.[2] The UK is still a respected partner with an extensive diplomatic footprint few can match, spanning most countries in the world. It plays a vital role in European security due to its top-class intelligence services and military presence in Europe and abroad. British officials play agenda-setting roles on the international stage, including at the G7, G20, NATO, the Organization for Security and Cooperation in Europe (OSCE), and the UN Security Council. As a stakeholder in the International Monetary Fund, the World Bank and the World Trade Organization, and thanks to the strength of its own financial jurisdictions, most of all the City of London, the UK has had enormous regulatory sway over the global financial system. The British government also remains a policy leader on everything from international development, to anti-corruption efforts, to the fight against climate change.

Still, it is undeniable that Britain’s reputation, leadership and influence in global affairs have all taken a hit. Since 2016, both of Britain’s most important partnerships, with Europe and the US, have come under huge stress. The complexity of Brexit has meant that much of the UK’s focus over recent years has been on untangling itself from the EU, rather than on crafting a new strategic partnership with the bloc. A month away from the end of the transition period, it is still unclear on what terms the UK will be cooperating with the EU from 1 January 2021.

Biden’s victory also changes things. After years of EU bashing under Trump, Biden has promised to repair the transatlantic relationship. His appointment for Secretary of State, Tony Blinken, has singled out the EU as one of the US’ most important partners. This raises important questions for the UK: what role does it want to play in the transatlantic relationship now that it has left the EU, but is still very much part of Europe?

A focused Britain

If you want to imagine what ‘Global Britain’ could be, a close look at Britain’s stand over Hong Kong this summer is a good place to start. In terms of actions, allies and openness, the measures taken by London contained the ingredients of what British foreign policy has been in the past and could be in the future: confident, values-driven and capable of swift action.

When news broke in May that Beijing was considering levying unprecedented restrictions on Hong Kong through a new national security law, the British government moved quickly to oppose the move and respond. Not only did the UK shift its geopolitical posture toward China, but it played a leadership role by setting the policy of opposing Beijing’s overreach, and getting like-minded countries, like France and Germany, to back it. British diplomacy also engaged strategically with allies, first gathering Australia and Canada and then the US to support its cause—demonstrating that the Anglosphere countries could work as an ‘action group’ to push back against China, and swiftly.

The UK’s decision to offer a pathway to citizenship to more than three million Hong Kong citizens was met with widespread acclaim in US policy circles, as it combined a principled defence of the rule of law with greater openness to immigration from Asia. British policy has not reversed China’s strategy toward Hong Kong, but it has sent a strong signal that the UK remains an independent player able to stand up for its interests and values.

These events, and the UK’s role in them, reveal that the country has an opportunity to participate in the reshaping of geopolitics in the Asia-Pacific. Australia, France, Germany and the US are all looking at new ways to engage there, but there is currently no global grouping structured around meeting the challenge of China’s influence, the way that NATO checks Russian ambitions. Britain has a unique opportunity to encourage one, if it leverages its strengths to create goodwill and work with allies, like it did for Hong Kong.

Steps toward this are happening already. There has been a sharp uptick this year in ministerial meetings of the Five Eyes intelligence alliance between the UK, the US, Canada, Australia and New Zealand. They have gone beyond its usual intelligence-sharing remit to discuss collaboration in the fight against the pandemic, and there is a mutual desire to deepen this cooperation further. Another proposal that has generated interest in Washington—and could be another conduit for action in the Asia-Pacific—is the potential D10 grouping, an alliance of ten democracies made up of the members of the G7, plus Australia, India and South Korea.[3]

The UK will also need to strengthen bilateral alliances. First, a successful ‘Global Britain’ would need to build an alliance with Japan. Luckily, London is knocking on an open door. Not only has Tokyo agreed in principle to Britain’s first post-Brexit free trade deal, it also wants Britain to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership ⎯ the successor to the US-led Trans-Pacific Partnership, which Trump scuppered after taking office in 2017 ⎯ and has expressed a keen desire to join Five Eyes.

The second alliance is with Australia. First and foremost, a ‘Global Britain’ will need to take a more realistic approach to its collective ties with Canada, Australia and New Zealand. Some Brexiteers dream of a new bloc around ‘CANZUK’ akin to the European Economic Community; this is an imperial fantasy. But there is still much that Britain could do to share burdens and coordinate foreign policy and security with Australia. Opportunities could include developing joint agendas and proposals for the future of Five Eyes and the G7. Given the bipartisan consensus within the US on the need for a tougher approach to China, this UK-Australia dialogue could eventually develop into an annual ‘G-Group’ style meeting for the UK, Australia and Canada to coordinate where they stand vis-á-vis the US. The UK and Australia could also make new, joint security investments and deployments in the Asia-Pacific, and allow close-to-free movement between the two countries, as well as between the UK and New Zealand.

The UK should also continue working closely with Canada. The two governments recently coordinated their responses to Hong Kong, Belarus’ flawed election and the recent flare-up between Armenia and Azerbaijan, and have co-funded a new Global Media Defence Fund at the UN. This could similarly grow into new joint security investments and deployments to meet threats posed by Russia and a new close-to-free movement travel agreement with Ottawa.

In terms of agility, Britain has much to learn from Tokyo, Canberra and Ottawa, as well as Oslo, about being a successful middle power, even if some in the UK still aspire to great-power status. Japan, for example, exists outside regulatory blocs, but has run a focused strategy supported by a successful domestic industrial policy, while Norway has chosen to concentrate its international efforts on conflict resolution and mediation. These are models for what ‘Global Britain’, with the right domestic reforms, could eventually be.

Much closer to home, the UK should aspire to become the EU’s partner of choice. The EU is also exploring the idea of smaller groupings, where one or a group of member states work together to tackle a specific foreign policy issue, like capacity-building in the Sahel or establishing safer routes for asylum-seekers. There may be scope for greater British involvement and input into the design of these projects, especially on issues where the UK and EU share common interests. London should embrace the EU’s offer of a comprehensive security and foreign policy deal—and push for one that gets it as close as possible to achieving permanent ‘observer status’ in its policymaking.

Britain should not be afraid to push for new formats too. It could, for example, consider broadening the remit of its E3 partnership with France and Germany beyond discussing Iran, to include European and international security. And where the UK is already influential, like in NATO and the UN, it should push for reform. A ‘Global Britain’ that invests in as many channels of influence as possible could come to enjoy privileged partnerships ⎯ or, to use a dated but still emotive term, ‘special relationships’ ⎯ with both Washington and Brussels.

Finally, Britain should seek to join as many multilateral trade agreements and bodies as possible. In addition to joining the CPTPP, it should launch a broader strategy in Asia to reinforce, associate or where possible even join key security bodies, including the Asia-Pacific Economic Cooperation forum; ‘the Quad’, a security dialogue among Australia, the US, India and Japan; and the recently proposed Resilient Supply Chains Initiative involving Australia, India and Japan.[4] These ties will also help the UK react to heightened competition between the US and China.

By expanding its alliances into the Global South, as well, the UK could buttress its ability to bring countries together. On tackling epidemics, for example, Britain could help countries that have strong research facilities, like the US, France, Germany and Switzerland, coordinate with countries that have frontline experience handling public health crises and new outbreaks, like South Africa. Through other alliances, it could put forward new ideas and launch multilateral regulatory processes on a range of issues that are vital for British interests, from eliminating kleptocracy and money-laundering, to adapting to climate change, to building better supply chains and new critical infrastructure like 5G.

This is what ‘Global Britain’ can be: a mid-sized country that reinforces the multilateral system through close alliances with the US and the EU, and new, deeper ties with democracies in the Asia-Pacific. Building trust and credibility with these allies can help the UK make up for its post-Brexit loss of regulatory influence and its vulnerability to US diktats over 5G and other emerging technologies. And at a time when many countries appear to be marching toward more individualism, Britain could choose to play a vital role in strengthening the multilateral system, and ensuring it is a fair and robust one.

A Britain that delivers

Ultimately, though, the UK will be judged not by what it promises on the international stage, but by what it does. The Government’s recent threat to breach the Withdrawal Agreement it negotiated with the EU less than a year ago has been seized upon by critics at home and abroad as proof that the country is heading toward political isolation. The House of Lords has removed the controversial provisions – though the Government has said it would reintroduce them unless talks with the EU over the Northern Ireland Protocol made progress. This has not gone down well in Brussels. And in his phone call to the Prime Minister, President-elect Biden warned that the Brexit outcome must respect the Good Friday Agreement. The Chancellor’s recent announcement that the UK would reduce aid spending from 0.7 per cent to 0.5 per cent of GDP has also disappointed partners across the developing world.

Building a good reputation can take years, but it can be lost in a matter of days. In the long-run, this behaviour could have serious consequences for the way the UK is perceived internationally, and damage the attractiveness of its domestic market for foreign direct investment. It might even prevent the British government from negotiating trade deals in the future. To create a ‘Global Britain’, the UK, above all, will need to command the trust of other countries. It will need to continue to invest in its diplomatic network, and it must be mindful of the tone it uses to convey its global ambitions.

The UK must ensure that it has the means to live up to those ambitions. COVID-19 will inevitably redirect the Government’s purse, with knock-on effects on public finances. British leaders will need to make careful and considered choices about where to invest and reallocate funding, ensuring that they prioritise the issues and regions singled out in its foreign policy review. The UK will also need to be honest about trade. Even if, by some miracle, it replicates all the deals the EU has with its trading partners and secures new deals with the US, India, China and the Gulf states, those arrangements would only increase Britain’s GDP by 0.2 per cent after 15 years, according to government projections.[5] If the UK is serious about becoming an export-oriented economy that is productive and grows in the long-run, its trade deals will need to be supported by a strong and well-considered industrial strategy.

The UK will need to protect some other budget lines; for example, it should continue to protect funding for the BBC World Service and the British Council, which are vital tools of soft power. It could do more to protect journalists abroad, perhaps through the Global Media Defence Fund with Canada. It should also quickly move to restore aid spending to 0.7 per cent. Beyond that, the UK should increase its efforts to support and fund research on artificial intelligence, quantum computing and life sciences to remain competitive in these areas with the tech powerhouses of the US and China.

The UK must also make sure that it can act decisively. Johnson’s decision in June to merge the Foreign and Commonwealth Office and the Department for International Development into one foreign policy department may be one step in the right direction, as it will centralise decision making, staffing and budgeting. But the Government must think about how to hone and hold onto that expertise. These offices typically experience very high levels of staff turnover, with officials often choosing to work on very different policy briefs every three years. This has long contributed to a loss of institutional memory and some short-sightedness, as demonstrated by the UK’s decision to drastically reduce the size of its Soviet desk shortly after the fall of the Berlin Wall. To avoid this kind of thing happening again, the UK should consider building up its in-house expertise, as well as drawing on foreign policy expertise outside of government, in think tanks, universities, civil society and the private sector.

Finally, the UK needs a much more inclusive public debate to generate support for foreign policy. Successive governments have not always done a good job of explaining what they were doing on the global stage or why it mattered. While Johnson’s government has promised a ‘Global Britain’ that delivers for Britons all across the country, it still must demonstrate how its new foreign policy plan will benefit the UK as a whole, especially Scotland and the other devolved governments.

With the Brexit saga slowly drawing to an end, Britain needs to think about its future. The world needs the UK to be an agile actor, with the right resources and strong networks to be effective on the global stage. When it comes to strategy, political promises and vision are not enough; it will also need to show leadership, trustworthiness and a commitment to being a force for good in the world. British leaders will need to have a strong sense of the country’s significant strengths and weaknesses, as well as a determination to use that knowledge to the greatest advantage. The longer Britain waits, the harder it will be to convince the global community that it is serious about the role it wants to play.

This essay was adapted from an article In the Aftermath of Brexit, What Can ‘Global Britain’ Be? published by World Politics Review in October 2020.

Ben Judah is a Nonresident Senior Fellow at the Atlantic Council and author of “This is London: Life and Death in the World City.”

Georgina Wright is a senior researcher on the Brexit team at the Institute for Government and a visiting fellow at the German Marshall Fund of the United States.

[1] Ben Judah and Georgina Wright, In the Aftermath of Brext, What Can ‘Global Britain’ Be?, World Politics Review, October 2020, https://www.worldpoliticsreview.com/articles/29149/how-a-global-britain-could-cope-with-the-brexit-consequences’

[2] Maxine Kelly, FT 1000: the fourth annual list of Europe’s fastest-growing companies, Financial Times, March 2020, https://www.ft.com/content/691390ca-53d9-11ea-90ad-25e377c0ee1f

[3] Erik Brattberg and Ben Judah, Forget the G-7, Build the D-10, Foreign Policy, June 2020, https://foreignpolicy.com/2020/06/10/g7-d10-democracy-trump-europe/

[4] Amitendu Palit, The Resilient Supply Chain Initiative: Reshaping Economics Through Geopolitics, The Diplomat, September 2020, https://thediplomat.com/2020/09/the-resilient-supply-chain-initiative-reshaping-economics-through-geopolitics/

[5] EU Exit: Long-term economic analysis, HM Government, November 2018, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/760484/28_November_EU_Exit_-_Long-term_economic_analysis__1_.pdf

Topics

Brexit

Good Governance and Institutional Reform

International Relations and Geopolitics

Regions

Europe

United Kingdom

Could the UK project positive values on financial transparency?

Article by Alex Cobham, Andres Knobel and Robert Palmer

The global pandemic has put pressures on public services and on government revenue streams all around the world. Immediate measures being discussed include wealth taxes on those most able to contribute, and excess profits taxes on the few businesses that have benefited from state interventions to protect public health, such as Amazon. Underpinning such measures, and future possibilities for both revenue-raising and ending impunity for corruption, is the agenda for financial transparency and integrity.

The State of Tax Justice 2020 report identifies global revenue losses of $427 billion, due to the combination of corporate profit shifting and offshore tax evasion by individuals. Both types of tax abuse rely on a lack of financial transparency to go undetected. Together, as COVID-19 continues to thrive in each region of the world, they result in the loss of revenues equivalent to the annual salary of a nurse – every second.[1]

From the late 1990s to the mid-2010s, successive UK governments sought to project positive values abroad in the area of financial transparency, accountability and integrity. While that played differently under different governments, there was a common thread – a golden thread, if you will – around the importance of establishing the true ownership of assets and income streams, in order to fight corruption and to protect tax revenues.

For a variety of reasons including the legacy of the British Empire, that was always a complicated agenda. The UK has, in truth, pursued an ambivalent approach. Various policies designed to attract capital – both the shifted profits of multinational companies and the proceeds of outright corruption, have co-existed with efforts to limit at least some aspects of these behaviours. Nonetheless, the approach was largely successful in providing leadership opportunities to the UK and – to a degree – in supporting broader international progress. Events of recent years have complicated the position still further, but there remains a potentially powerful opportunity if the UK can make progress in cleaning out its own house in the coming years.

Specifically, the UK’s chairing of the powerful G7 group of countries in 2021 provides a platform immediately in the wake of Brexit becoming a reality, to re-establish a role at the forefront of efforts to promote financial transparency and integrity.

The problematic context is that the UK, together with its Overseas Territories and Crown Dependencies, is the largest international actor in the provision of both financial secrecy and in profit shifting by multinational companies. The State of Tax Justice 2020 identifies the UK and its network as responsible for $160 billion of tax losses around the world annually, or more than a third of the global revenue losses due to cross-border tax abuse by companies and individual.^[2] The opportunity to project positive values will depend on taking genuine, substantive steps to curb these abuses – and working internationally to propagate the advances.

The ABC of transparency, and UK leadership

The Tax Justice Network’s ABC of transparency is a central element of the policy platform laid out after the organisation’s formal establishment in 2003, and provides a broad structure in which to understand the main areas of policy progress over recent decades. While initially derided as utopian, each element of the platform has subsequently been adopted onto the global policy agenda.

‘A’ stands for the automatic exchange of financial information between countries, ensuring that the tax authorities in one country receive annual information on the foreign financial accounts of their tax residents. This area has arguably seen the greatest progress. The previous standard of information exchange ‘upon request’ has largely been consigned to history. The OECD Common Reporting Standard includes more than 100 signatories, including all significant financial centres except the USA, and provides for multilateral, automatic exchange. This has helped tax authorities around the world identify, and tackle, tax evasion.

The ‘B’ of the ABC relates to beneficial ownership transparency, and specifically the introduction of fully accessible, public registers of the ultimate beneficial owners of companies, trusts and foundations. The emphasis on beneficial owner is to distinguish from the legal owner, which is often simply another legal vehicle. To understand the potential for corruption, tax abuse and other crimes, it is necessary to know the identities of the warm-blooded human beings who stand behind legal entities. 80 countries have so far committed to disclosing beneficial ownership information.^[3]

The ‘C’ refers to public, country by country reporting by multinational companies. This measure, based on an original draft accounting standard developed by the Tax Justice Network, effectively creates a transparency level playing field with small and domestic businesses that publish their annual accounts.^[4] The measure, adopted into an OECD standard for all large multinationals in 2015, requires data on the economic activity, profits declared and tax paid, in each jurisdiction of operations. Publishing this data would lay bare the patterns of profit shifting, allowing both multinationals and the jurisdictions responsible for profit shifting to be held accountable. The OECD data remains privately provided to tax authorities only and has significant technical weaknesses; but the leading setter of sustainability standards, the Global Reporting Initiative, has now introduced a fully robust standard for voluntary public reporting which is seeing enthusiastic adoption from leading companies including Vodafone, Philips and Shell.

The UK’s role in progress in each area has been valued. In broad strokes, the Labour government of Tony Blair elected in 1997 had taken the important step of recognising the threat posed to international development by the financial secrecy offered by ‘tax havens’. The 2000 White Paper on Globalisation put down an important marker in this area, and coupled with the Oxfam report of the same year on the revenue losses imposed by havens, played a catalytic role in energising what became the international movement for tax justice.^[5] The Blair government also initiated the Extractive Industries Transparency Initiative (EITI), which played a role in the gradual development of higher standards of disclosure of multinational companies’ payments to governments.

In terms of the ABC, the contributions are more specific and more recent. First, on automatic information exchange, the UK and its extended network of Overseas Territories and Crown Dependencies are among the signatories of the OECD Common Reporting Standard. In addition, the UK repeatedly pushed under David Cameron to ensure the full inclusion of lower-income countries, so that the benefits of the new transparency being created for OECD members would not be denied to others.

The UK has shown perhaps the greatest leadership on beneficial ownership, with David Cameron making the creation of the UK register for companies a central component of his ‘golden thread’ approach that underpinned both the G8 summit and his subsequent international statesmanship, including a 2016 anti-corruption summit where a number of additional countries committed to introduce company registers. The EU also acted on this agenda, committing to public registers not only for companies but also for trusts and foundations, while the UK government has been much more reluctant to take action on trusts. A backbench amendment in the UK parliament also led to a (pending) requirement for public registers for companies in the Overseas Territories.[6]

Lastly, the UK’s involvement in the rise of greater corporate transparency at country level dates back to the EITI but goes further. In 2016, an amendment to the Finance Bill made the UK government the first to legislate to make OECD country by country reporting data public. As yet, however, the Treasury has refused to make use of the powers granted, and it appears increasingly likely that the EU will move first.

A Global Asset Registry: Recommendations from the UK pilot

Critical to both international anti-corruption efforts and the prospects for effectiveness of wealth taxes, the proposal for a global asset registry relates to the creation of a searchable register, containing both public information and information accessible only to relevant tax and legal authorities, showing the beneficial ownership of all significant asset classes.[7] This would be achieved by enabling connectivity between existing registers, and creating additional data sources where necessary; and with the potential to extend within countries and across borders.

In 2019, the Independent Commission for the Reform of International Corporate Taxation (ICRICT) undertook a scoping study of asset ownership information available in the UK (with a final report due out in December 2020).^[8] The UK was in part chosen because of its relatively advanced position in some areas, and the report found that most assets that could be subject to a national asset registry are already required to register some ownership information with a government authority (e.g. land, cars, yachts, jets and stock of non-listed companies) or at least their ownership information is centralised by one or few private players, such as the central securities depository (for some listed stock and other financial assets) or the seven custodians offering vaulting services for gold and other precious metals. However, the report identified shortcomings, including the fact that government registries are not always centralised, or they may have incomplete information (e.g. no price or value information), or they may contain no public access to ownership information. In addition, there is no registry at all (either by the government or a private actor) for art objects, antiques, jewellery, cash and crypto-assets such as bitcoins.

The study makes a series of recommendations to address the gaps in UK asset transparency. In addition to the creation or expansion of registers, and the inclusion of price and value data, the study highlights the need for information to be published online for free, in open data format; and, importantly, for the publication of more comprehensive statistics, for example by income level, and type of asset for those assets that are considered confidential, such as bank accounts. A complementary measure would be to require self-reporting of wealth information on worldwide assets, potentially based on a threshold. This would be easy to implement because the UK already requires most of this information under inheritance tax. It would also allow the estimation of wealth, both to measure inequality and in case there is a future decision to levy a wealth tax.

Regardless of the approach to be implemented, the scoping study considered that the UK is well positioned to establish a national asset register containing ownership information at the beneficial ownership level, for a number of reasons. First, there is political commitment towards becoming a champion in transparency and open data, as shown by the UK’s leadership in publishing companies’ beneficial owners in online public registries where information is available for free and in open data format. Second, the UK already has experience and interest in analysing and measuring wealth, as shown by the Office of National Statistics (ONS) publications based on the Wealth and Assets Survey and wealth statistics published by the UK tax authorities (HMRC) based on inheritance tax returns. Third, the UK has the technology and capabilities to process and apply advance analytics to millions of data from different sources, as exemplified by HMRC’s “Connect” software used to detect tax misreporting. Finally, the report notes that the UK’s recent experience with Unexplained Wealth Orders demonstrates the intention to take action, in response to the information it collects, by freezing and confiscating assets whenever the owner cannot explain how they were acquired.

Opportunities at the G7 and beyond

Post-Brexit, the UK faces major challenges in many areas, including in establishing a new regime for its international trade. With the decision to end the independence of the Department for International Development and to set aside the aid commitment of 0.7 per cent of national income, the prospects for influence and international policy leadership appear limited. But the history of the UK’s positioning on critical issues of financial transparency points to a potential opportunity.

Eight years on the UK’s chairing of the G8 group of countries in 2013, the 2021 meeting of the G7 provides a global moment to re-establish the country’s role in promoting financial transparency. Bold steps on transparency at home would be needed to set the basis; but the possibilities are clear and feasible. All major UK political parties are committed in principle to tackling tax avoidance and tax evasion, and polling for Tax Justice UK shows that 84 per cent of people want politicians to close loopholes to stop big companies and wealthy people avoiding paying tax, rising to 91 per cent for Conservative voters.[9]

In respect of the automatic exchange of financial information, the UK can set a standard for the publication of aggregate data on the financial account holdings of UK tax residents in each other jurisdiction, alongside the values reported to HMRC – providing an immediate accountability check on the extent of undeclared assets and related income streams, as well as identifying the most high-risk jurisdictions for non-declaration. The Australian and German governments have taken some steps in this area; the UK could create the standard. Adding in aggregate data on the holdings in UK financial institutions of tax residents of other countries would be world-leading, and a valuable service especially to those lower-income countries still excluded from the OECD exchange of data.

In terms of beneficial ownership, the UK should implement without further delay its stalled commitment to create a public register of the beneficial owners of foreign companies owning UK property, and could then build on its existing lead and announce steps towards joining up and addressing the gaps in the various ownership registers, setting a course for the broader asset transparency envisaged in the proposals for a global asset register to fight corruption and tax abuse.[10] And on country by country reporting, the UK could simply make use of the existing legislation and require multinationals to publish their OECD standard data – with effectively zero additional compliance costs, and the potential to bring in significant revenues.^[11]

Finally, continuing to assist the Crown Dependencies and Overseas Territories to achieve the same standards would be valuable – while also indicating the need for financial support for these jurisdictions to pursue alternative development paths. This should be the bare minimum to reflect the UK’s historic and continuing responsibility for encouraging so many of these jurisdictions to pursue offshore financial services. That policy stance, based on reducing UK aid spending and bolstering the City of London’s pre-eminence by encouraging illicit inflows, reflected the scant regard of policymakers at the time for the economic distortions and needless inequalities that resulted, as part of the broader damage of the ‘finance curse’.[12]

Taking the opportunity to promote positive values of financial transparency, with the platform of the G7 chair in 2021, will not be easy – but could fundamentally reposition the UK, support its dependent territories to find new economic futures, and make a major contribution to global financial transparency and to curbing the scale of international corruption and tax abuse.

Recommendations

The UK should leverage its chairing of the 2021 G7 and its preeminent position in international finance by taking leadership on financial transparency, with commitments to:
- publish aggregate data on the automatic exchange of financial information to curb further the threat of bank secrecy;
- extend, improve and connect public registers of beneficial ownership to eliminate anonymous ownership of assets; and
- put into practice the existing legislation to require public country by country reporting from multinational companies, to curtail profit shifting.
The UK should ensure the rollout of all these measures across its network, by working with the Overseas Territories and Crown Dependencies – including through substantial financial support to repair the damage of the UK’s having promoted their offshore financial secrecy role over decades, and to assist the transition to alternative economic development paths.

Alex Cobham is chief executive of the Tax Justice Network, and a commissioner for the Scottish Government’s Poverty and Inequality Commission. Recent publications include The Uncounted (Polity Press, 2019); and Estimating Illicit Financial Flows (OUP, 2020, with Petr Janský).

Andres Knobel is a senior researcher at the Tax Justice Network. He has also worked as a consultant on financial secrecy for the Inter-American Development Bank, ICRICT and the UN High-Level FACTI Panel.

Robert Palmer is the Executive Director of Tax Justice UK, which works to ensure the UK’s tax system is fair and effective. Previously he helped establish the Open Data Charter secretariat. While at Global Witness, Robert led a global campaign to tackle the laundering of the proceeds of corruption, including by championing beneficial ownership transparency.

Image by Diliff under (CC).

[1] Tax Justice Network, Global Alliance for Tax Justice and Public Services International, State of Tax Justice 2020, Tax Justice Network, 2020, https://www.taxjustice.net/reports/the-state-of-tax-justice-2020/

^[2] Tax Justice Network, Global Alliance for Tax Justice and Public Services International, State of Tax Justice 2020, Tax Justice Network, 2020, https://www.taxjustice.net/reports/the-state-of-tax-justice-2020/

^[3] Open Ownership: https://www.openownership.org/

^[4] Richard Murphy, A Proposed International Accounting Standard: Reporting Turnover and Tax by Location, Association for Accountancy and Business Affairs, 2003, http://visar.csustan.edu/aaba/ProposedAccstd.pdf; Alex Cobham, Petr Janský and Markus Meinzer, A half-century of resistance to corporate disclosure, Transnational Corporations 25(3), 1-26, 2018, https://unctad.org/system/files/official-document/diaeia2018d5a2_en.pdf

^[5] HMG, Eliminating World Poverty: Making Globalisation Work for the Poor, White Paper on International Development, HMSO, 2000, https://dera.ioe.ac.uk/4613/1/whitepaper2000.pdf. Ruth Mayne and Jenny Kimmis, Tax Havens: Releasing the hidden billions for poverty eradication, Oxford, 2000, https://policy-practice.oxfam.org.uk/publications/tax-havens-releasing-the-hidden-billions-for-poverty-eradication-114611

[6] BBC, Ministers back down on tax haven company registers, May 2018, https://www.bbc.co.uk/news/uk-politics-43965546

[7] See e.g. the work of the UK Wealth Tax Commission at https://www.ukwealth.tax/, including its forthcoming report; and the recent Treasury Select Committee evidence session dedicated to the potential: https://committees.parliament.uk/event/2744/formal-meeting-oral-evidence-session/.

^[8] Andres Knobel, Pilot study for a UK Asset Registry–Phase 1: An assessment of available asset ownership information, ICRICT, December 2019, https://static1.squarespace.com/static/5a0c602bf43b5594845abb81/t/5dfa0c37437fa7242cbe3793/1576668258459/Pilot+stydy+for+a+UK+Asset+Registry-Phase1-revised+version.pdf

[9] Tax Justice UK, Talking Tax: How to win support for taxing wealth, Tax Justice UK, https://www.taxjustice.uk/uploads/1/0/0/3/100363766/talking_tax_-_how_to_win_support_for_taxing_wealth.pdf

[10] Department for Business, Energy & Industrial Strategy, Draft Registration of Overseas Entities Bill, Gov.uk, July 2018, https://www.gov.uk/government/consultations/draft-registration-of-overseas-entities-bill

^[11] Tax Justice UK, Simple tax avoidance measure could raise £2.5 billion, Tax Justice UK, 2018, https://www.taxjustice.uk/blog/simple-tax-avoidance-measure-could-raise-25bn

[12] On the UK government decisions and on the damage of an excessively dominant financial sector, including for the UK itself, see Nick Shaxson: 2011, Treasure Islands: Tax Havens and the Men who Stole the World, London: Palgrave Macmillan on the development of the UK’s network; and 2018, The Finance Curse: How Global Finance is Making Us All Poorer, London: Bodley Head.

Topics

Brexit

Good Governance and Institutional Reform

International Relations and Geopolitics

Regions

Europe

United Kingdom

An environmental dimension to UK foreign policy

Article by Luke Murphy

Four years on from the vote to leave the European Union (EU) much has been written about the UK’s international role in a post-Brexit world. Only recently, however, has the climate crisis emerged as potentially the strongest candidate around which the UK could forge a genuine leadership role in the world and make the vision of ‘Global Britain’ a reality.[1]

As the host and president of the G7 and as the host (in Glasgow) of the international climate summit, COP26, the UK has been handed a golden opportunity to demonstrate leadership on tackling the climate crisis. To make the most of this opportunity, the UK must ensure that it gets its own house in order in terms of delivering ambitious domestic commitments on decarbonisation, as well taking some essential actions at the international level in building progressive partnerships, embedding a net zero mentality in aid, trade and finance, and through carving out a future role in the shaping of international agreements and institutions. The Integrated Review of Security, Defence, Development and Foreign Policy, to be published in early 2021, also presents an opportunity to set out how the UK intends to champion ambitious action on climate through a pivotal year and in the years to come.[2]

The UK as a ‘climate leader’ isn’t new, but its role needs renewing

The idea of the UK being a world leader on climate is, of course, nothing new. Governments of all parties have ensured that over the past decade and more the UK has been able to lead the way with groundbreaking commitments, legislation and policies on climate. These include the groundbreaking Stern report in 2006, which looked at the economics of climate change, the world leading Climate Change Act passed in 2008 and being the first major economy to commit to a legally binding net zero 2050 target.[3]

However, while the net zero target passed last year marked a shift back towards the centrality of climate within UK policymaking, the previous few years had seen some weakening in terms of commitment and delivery. Perhaps most symbolically in 2013 when the then Prime Minister David Cameron called to ‘get rid of all the green crap’ and more importantly inadequate progress is being made in terms of meeting the 4^th and 5^th carbon budgets, both stepping-stones towards the overall reduction of the UK’s greenhouse gas emissions.[4]

Why the UK and why now?

Nevertheless, the coming year offers a significant opportunity for the UK to renew itself as a global leader on climate. The question is, why the UK and why now?

The case for renewing the UK’s role as a global climate leader is strong. Firstly, as the fifth largest historic emitter of carbon emissions in the world and as one of the prime exporters of an economic model that has proved to be unsustainable in environmental terms, the UK has a responsibility to ensure that its foreign policy recognises its historic legacy.[5] Secondly, there is the UK’s record on leveraging international climate action. From the climate change act to the net zero target, the UK’s visible action and leadership over the years in tackling the climate crisis has made a difference in spurring action from other countries.

Thirdly, there are the reputational and soft power benefits. At a time when the UK’s standing in the world has been diminished as a result of its decision to leave the EU, as well as the threats to break international law as part of the UK Internal Market Bill, there is a need to rebuild partnerships and confidence in the UK as a trusted international actor – action on the climate crisis provides such an opportunity.[6] Moreover, the Government itself has recognised that such action provides an opening to enhance the UK’s soft power.[7]

Fourthly, there are the economic benefits. The discussions on moving to net zero emissions has shifted worldwide from being a preoccupation of environmentalists to a recognised necessity of economists and policymakers. We’re now moving into a third phase as many countries around the world see the transition to a net zero economy as one of boundless opportunity, an investment and not a cost.[8] In the past few months alone, China, South Korea and Japan have all committed to new net zero targets.[9] The race to net zero has begun and if the UK is to seize the economic opportunities on offer then it cannot afford to be left behind.

Finally, there is the confluence of events in 2021 that should make climate diplomacy a top tier priority for the UK government. Next year the UK will ascend the G7 Presidency, host the vital climate summit in COP26 and Joe Biden will be sworn in as the 46^th President of the United States. As host of both major events, the UK has the opportunity to demonstrate its ‘internationalism and green credentials’ according to the conservative MP Tom Tugendhat, chair of the Commons Foreign Affairs Select Committee, and cement relations with the incoming democratic President who has been crystal clear in his determination to make tackling the climate crisis a domestic and international priority.[10]

If the UK is to put words into action, and place climate at the heart of its foreign policy, what does it need to do in practice?

Leading by the power of example

As the host of COP26 in 2021, the UK can help inspire the rest of world and leverage greater ambition and delivery from other developed countries. But to do so, the UK must get its own house in order first. The legal commitment to net zero by 2050 was a necessary but, on its own, insufficient means of doing so. The policy and investment needed to deliver must swiftly follow. The Prime Minister, Boris Johnson, announced some bold measures in his recent ‘10-point plan for a green industrial revolution’ but it fell well short of a strategy to deliver on our legal commitments.[11]

The UK must go further in terms of its targets, policies and investments. This should include an ambitious ‘Nationally Determined Contribution’ (NDC) – commitments by each country under the 2015 Paris Agreement to reduce emissions and adapt to the impacts of global heating – this would imply a reduction of at least 72 per cent in emissions by 2030 compared to 1990 levels according to new research by WWF.[12] This should be backed by the creation of new institutions including a ‘Net Zero and Just Transition Delivery Body’ charged with developing a national strategy and sectoral plans to deliver on our climate commitments.[13]

All of this must be supported by a significant increase in investment in projects ranging from sustainable public transport, such as the electrification of rail and bus networks, to nature investments including tree planting and peatland restoration. Only by getting the UK on track to meet its net zero commitments will it credibly be able to call itself a global leader on climate and maximise its influence through its foreign policy.

Building progressive partnerships and shaping climate politics

The UK also has an important role in building progressive partnerships and shaping global climate politics. Although diplomatic success can be hard to determine, some have pointed to evidence of the UK’s impact in the past from the introduction of carbon market pricing in China to power sector reform in India.[14] Some ambassadors have also pointed to the closer bilateral relationships between the UK and countries in Latin America, leveraged through climate diplomacy.[15]

As host to the G7 and then COP26, the UK will have an outsized platform and opportunity to wield influence and use its diplomatic expertise to drive progress on international climate action.[16] In this regard, there is much to be learnt from France’s approach in achieving the 2015 Paris Agreement where its skillful diplomacy delivered a groundbreaking international agreement on climate.[17] Putting this into practice will require concerted effort to build key progressive partnerships and shape climate politics. Working closely with key allies like the EU and particularly the US where Joe Biden has placed a high priority on climate action, the UK should seek to create focused campaigns on key issues including through groupings such as the Climate Ambition Alliance.[18]

An important sign of progress will be the summit hosted by the UK government on 12^th December at which Boris Johnson has called on world leaders to ‘announce genuinely transformational net zero targets and bold climate finance pledges’.[19] Ensuring this happens in practice will rely not just on the strength of the UK’s diplomacy but also its own NDC commitment as outlined above. Other areas that the UK should focus its diplomatic attention include key projects, such as the Chinese Belt and Road Initiative.[20] This immense infrastructure project poses significant challenges to the world’s ambitions. The UK will need to work with key partners to influence China at every stage from financing to the laying of the infrastructure.

Finally, the UK should step-up its commitment to acting as a ‘supporting partner’ in providing policy, financial and technological assistance to those nations most affected by the climate crisis.[21] A key tenet of foreign and aid policy should be working with such less industrialised countries to build their capability and local institutions in order to accelerate their climate mitigation and adaptation efforts.[22]

Climate progress through progressive trade policy

Between 1990 and 2016, the UK reduced greenhouse gas emissions released within its national borders by 41 per cent, but those emissions from goods consumed in the UK but produced elsewhere fell by only 15 per cent.[23] Indeed, the UK’s consumption emissions in the 1970s were just 0.2 per cent higher than our territorial emissions, whereas they are 37 per cent higher today.[24] But the UK also has much broader environmental impacts, the evidence suggests that if everyone in the world were to live like the average UK citizen, then we would need 2.5 planets worth of resources to sustain us.[25] In other words, much of the UK’s wider impacts on the climate and our environment are currently being offshored.

As the UK seeks to strike its own trade deals outside of the EU for the first time in four decades, there is an opportunity for the UK to embed high environmental standards including robust standards on greenhouse gas emissions, as well as high product and labour standards, within any future trade agreements. The UK’s relationship with the US will be central to making this approach a reality. In comparison to trading giants including the EU, China and the US, the UK is relatively small in global trading terms. But if the UK is able to lever similar commitments to high standards from countries with close diplomatic ties, the UK could punch above its weight in delivering progressive climate action. Moreover, the shape of the UK’s Emission Trading Scheme, which will be in place from 1^st January 2021, could also be central to the UK’s approach to emissions reductions both at home and abroad.[26]

Financing the transition

The funds that the UK spends abroad through climate finance will be central to cementing its role as global climate leader. In that regard, the decision to cut Official Development Assistance (ODA) (international aid spending) from the world leading 0.7 per cent of GDP to 0.5 per cent for an undefined period is both a terrible signal in terms of the UK’s supposed leadership and is also terrible climate policy. The UK has a committed a proportion of its ODA to both the mitigation of and adaptation to the climate crisis so a cut in the ODA budget is likely to feed into a reduction in the UK’s spending on climate action abroad.

In light of this, the Government should now seek to do a number of things through its contribution to international climate finance. First, the Government should commit at the earliest opportunity to reinstate the 0.7 per cent target. Second, the need to mitigate and adapt to the climate crisis should be mainstreamed across the whole of the ODA budget and not just those parts dedicated to climate action. Third, the Government should make a significant contribution to the international Green Climate Fund and in doing so, seek to leverage similar commitments from international partners. The UK could use an increased financial pledge to recognise its status as the fifth largest contributor to cumulative emissions by explicitly linking its historic contribution to the scale of its financial commitment. The Institute for Public Policy Research (IPPR) has calculated that a contribution of circa £20 billion between now and 2030 would be commensurate with the UK’s historic contribution and the level of emissions reduction that such a figure could bring about through supporting less industrialised nations to mitigate and adapt to global heating.[27] The Government could also build on this commitment by extending such a ‘fair share’ approach to its other environmental impacts across the world.[28]

As a global financial centre, the UK has significant influence throughout the world on the direction of sustainable private finance. In recognition of this role, the Government has made making progress on this agenda a key priority for COP26 and the Chancellor, Rishi Sunak, has made some recent announcements on the disclosure of climate risks and the issuing of green gilts.[29] But in many commentators’ eyes this is the bare minimum that needs to be done.[30] The Government could for instance go further by requiring all firms to set themselves binding targets for emissions reductions as well as to disclose all of the emissions that arise from their supply chains and consumers use of their products.

Finally, the Government should confirm its intention to phase out UK Export Finance (UKEF) – the Government agency which provides export credit guarantees to companies trading abroad – support for fossil fuel projects, a practice which is wholly incompatible with global leadership on climate. Furthermore, UKEF should also seek to actively increase investment into low-carbon and climate compatible opportunities abroad such as offshore wind and decommissioning.

International agreements and institutions

The UK has long held an influential role in the shaping, reform and creation of international institutions and agreements. In the pre-Brexit era, most of the UK’s influence was through successful shaping of the EU’s positions, amplifying Britain’s influence in the world, within institutions such as the UNFCCC (although the UK acted on its own behalf withing the relevant international institutions for aviation and shipping and remained influential).[31]

In the post-Brexit era, the UK must seek to maintain its influential role on international agreements and institutions. As IPPR has previously argued, this could include seeking reforms of the World Bank, IMF and other multilateral development agencies and funds to increase their policy focus on and financial investment climate and environmental matters.[32] It will also entail the UK increasing its international profile as a country seeking to drive further climate ambition, as well as seeking to retain a strong influencing role in the determination of EU positions.

Conclusion

Tackling the climate crisis has now become a significant priority for the UK within domestic policy, which means that driving progress internationally is fundamentally in the national interest. Moreover, as previous experience has demonstrated it is a powerful tool in building the UK’s soft power as well as its reputation around the globe. It will also provide economic opportunities and benefits to British companies at home and abroad. Perhaps most importantly, however, is the impact that the UK can have as a high-profile champion of ambitious climate action around the world. 2021 could be a crucial year in redefining what the UK’s role is in the world; it is an opportunity that we, and the world, cannot afford to miss.

Recommendations

Lead by the power of example: If the UK wishes to be a leader on tackling the climate crisis abroad, then it must get its house in order at home. That must include more ambitious commitments for climate action through its Nationally Determined Contribution, as well as the necessary policies and investments to deliver in practice.
Building progressive partnerships and shaping climate politics: The UK must seek to use climate diplomacy to lever greater climate ambition internationally. This will involve forming close partnerships and coalitions with international partners, focusing on key projects to influence such as the Chinese Belt and Road initiative and acting as a ‘supporting partner’ to less industrialised nations.
Climate progress through progressive trade policy: The UK must use its new freedoms to strike trade deals to pursue commitments to high environmental standards including robust standards on greenhouse gas emissions.
Financing the transition: The UK should commit to reinstating the 0.7 per cent ODA target and mainstream climate action as a priority across the entire ODA budget and wider UK foreign policy. The UK should also make a contribution to the Green Climate Fund which is commensurate with its historic contribution to the climate crisis. The Government should also drive more ambitious action as the world’s financial centre on sustainable private finance and bring an end to support for fossil fuel projects abroad.
International agreements and institutions: The UK must seek to maintain its influential role on international agreements and institutions in relation to climate, including seeking progressive reform of institutions such as the World Bank, IMF and other multilateral development agencies in relation to climate and environmental matters.

Luke Murphy is Head of the Environmental Justice Commission and Associate Director for the Energy, Climate, Housing and Infrastructure Team at the IPPR.

Image by Number 10 under (CC).

[1] HMG, Global Britain: delivering on our international ambition, Gov.uk, September 2019, https://www.gov.uk/government/collections/global-britain-delivering-on-our-international-ambition

[2] Boris Johnson, PM statement to the House on the Integrated Review, November 2020, https://www.gov.uk/government/speeches/pm-statement-to-the-house-on-the-integrated-review-19-november-2020

[3] Nicolas Stern. 2006. The Economics of Climate Change: The Stern Review, Cambridge University Press. https://www.lse.ac.uk/granthaminstitute/publication/the-economics-of-climate-change-the-stern-review/

[4] Rowena Mason, David Cameron at centre of ‘get rid of all the green crap’ storm, The Guardian, November 2013, https://www.theguardian.com/environment/2013/nov/21/david-cameron-green-crap-comments-storm; IPPR. 2020. Faster, further, fairer: Putting people at the heart of tackling the climate and nature emergency, interim report of the IPPR Environmental Justice Commission, http://www.ippr.org/publications/faster-further-fairer

[5] Laybourn-Langton L and Rankin L. 2019. Our responsibility: A new model of international cooperation for the era of environmental breakdown, IPPR. http://www.ippr.org/research/publications/our-responsibility

[6] Georgina Wright, UK threats to break international law make a Brexit deal even more difficult, September 2020, https://www.instituteforgovernment.org.uk/blog/break-international-law-brexit-deal-difficult

[7] Written evidence submitted by the Foreign and Commonwealth Office (CLI0010) https://committees.parliament.uk/writtenevidence/3939/pdf/

[8] Camilla Cavendish, Climate diplomacy is winning its fight against a zero-sum mindset, The FT, November 2020, https://www.ft.com/content/e1127520-43f4-4324-9e08-59ac87648ca8

[9] David Hackett and IIona Millar, A new global paradigm for global climate action, November 2020, https://www.bakermckenzie.com/en/insight/publications/2020/11/biden-victory-ushers-in-race-to-the-top

[10] Leslie Hook, Katrina Mason and Derek Brower. Biden focuses on US climate diplomacy with key role for John Kerry, The FT, November 2020, https://www.ft.com/content/31d93942-6481-4e64-ba85-a6871a142862

[11] HMG press release, PM outlines his Ten Point Plan for a Green Industrial Revolution for 250,000 jobs, November 2020, https://www.gov.uk/government/news/pm-outlines-his-ten-point-plan-for-a-green-industrial-revolution-for-250000-jobs

[12] WWF, COP26: The UK’s 2030 Climate Target to Cut Emissions, November 2020, https://www.wwf.org.uk/updates/cop26-climate-target-cut-emissions

[13] IPPR. Faster, Further, Fairer.

[14] Pete Betts, Summary Report of the International Advisory Group to the Committee on Climate Change in Relation to its Work on the UK’s Long-Term Emissions Goal, May 2019, https://www.theccc.org.uk/wp-content/uploads/2019/05/International-Net-Zero-Advisory-Group-Chair-Report.pdf

[15] Ibid

[16] ECIU, UK diplomacy and influence ahead of COP26, October 2021, https://eciu.net/analysis/briefings/international-perspectives/uk-diplomacy-and-influence-ahead-of-cop26

[17] Fiona Harvey, Paris climate change agreement: the world’s greatest diplomatic success, December 2015, https://www.theguardian.com/environment/2015/dec/13/paris-climate-deal-cop-diplomacy-developing-united-nations

[18] Climate Ambition Alliance: Nations Renew their Push to Upscale

Action by 2020 and Achieve Net Zero CO2 Emissions by 2050, December 2019, https://cop25.mma.gob.cl/wp-content/uploads/2020/04/Alianza-11122019-INGL%C3%89S.pdf

[19] HMG News Story, PM: ‘Climate action cannot be another victim of coronavirus’, September 2020, https://www.gov.uk/government/news/pm-climate-action-cannot-be-another-victim-of-coronavirus

[20] Ibid.

[21] Laybourn-Langton et al. Our responsibility.

[22] ibid

[23] ECIU. UK diplomacy and influence ahead of COP26.

[24] IPPR. Faster, Further, Fairer.

[25] O’Neill D W, Fanning A L, Lamb W F and Steinberger J K (2018) ‘A good life for all within planetary boundaries’, Nature Sustainability, 1:88–95, doi: 10.1038/s41893-018-0021-4

[26] Lindsay Edwards, UK greenhouse gas emissions trading scheme order published, November 2020, https://www.pinsentmasons.com/out-law/news/uk-greenhouse-gas-emissions-trading-scheme-order-published

[27] Laybourn-Langton et al. Our responsibility.

[28] Ibid.

[29] Alok Sharma, President Alok Sharma at launch of COP26 Private Finance Agenda, February 2020, https://www.gov.uk/government/speeches/cop26-president-alok-sharma-at-launch-of-cop26-private-finance-agenda; HMT, Chancellor sets out ambition for future of UK financial services, News Story, November 2020, https://www.gov.uk/government/news/chancellor-sets-out-ambition-for-future-of-uk-financial-services

[30] Leslie Hook and Matthew Vincent, Green business reporting rules at risk of pale response, The FT, November 2020, https://www.ft.com/content/ad01f2c9-9eb0-4db6-9898-220c688d16c2

[31] Pete Betts. Summary Report of the International Advisory Group.

[32] Laybourn-Langton et al. Our responsibility.

Topics

Brexit

Climate Change

Energy, Environment and Resources

International Relations and Geopolitics

Regions

Europe

United Kingdom

Three pillars for a sustainable trade policy after Brexit

Article by Ruth Bergan and David Lawrence

In January, for the first time in nearly 50 years, the UK will ‘take back control’ of its trade policy from the EU. During and since the referendum campaign, Brexit-supporting politicians have presented voters with a narrative of Britain’s place in the world as a buccaneering, free-trading nation. While this narrative can reasonably be queried (the British Empire was arguably as much a protectionist cartel as a force for open trade), it has been the justification for leaving the EU’s customs union and single market and beginning new trade negotiations with the US, Australia, New Zealand and the Trans-Pacific area, while also renegotiating trading relationships with the EU, Japan, Canada and elsewhere.^[1]

Regardless of the irony of leaving the world’s largest trading bloc in order to seek more trade, it is clear that trade will be a key part of the government’s ambitions for Brexit. Much less clear is what these ambitions will entail in practice: while the government is keen to strike new deals, they lack an overarching strategy and they have found themselves at odds with farmers, environmental groups, businesses, consumers and trade unions over the potential impact of these deals on all sorts of issues, from chlorinated chicken to the NHS. And yet, it is true that Brexit is an opportunity for the UK to rethink the role of trade in the 21st Century, to build consensus across different groups in the UK, and to develop a trade policy which benefits both people and the planet.

The UK has a unique opportunity to reimagine a socially and environmentally just trade policy. Achieving this will require strategic thinking about what values we want to underpin the UK’s trade negotiations. Rather than rushing into negotiations, it will require democratising our processes for negotiating trade deals and setting clear lines on the environment and human rights. These three pillars – democracy, the environment and human rights – should form the core of our trade policy after Brexit. With them, our trade policy can be genuinely progressive and world-leading; without them, our trade policy poses a risk to our environment, sustainable development, and millions at home and abroad whose lives are affected by UK trade.

Democracy

Despite the rhetoric of ‘taking back control’, the government has done very little to empower British MPs, or indeed British civil society and ordinary citizens, to influence trade policy after Brexit. This risks creating a culture of mistrust between the public, businesses, MPs and government, and a lack of transparency about what is on the table in trade agreements. The absence of an overarching trade strategy from the Department for International Trade, with clear objectives and principles, also means that businesses and civil society are left in the dark about the government’s objectives for new deals.

The UK would do well to learn lessons from TTIP – the proposed EU-US mega trade deal – which was met with significant opposition from European citizens, leading to its eventual collapse despite years of negotiations and political will from Brussels and Washington DC. TTIP collapsed in part due to public anger about the lack of transparency in the negotiation of the deal, as well as frustration that their own elected representatives could do little to scrutinise or stop the deal. The lack of transparency also meant that politicians struggled to assuage citizens’ concerns about US food standards, the impact of TTIP on public services including the NHS, and Investor-State Dispute Settlement (ISDS, which allows firms to sue governments for introducing regulations).

Ultimately, this meant TTIP caused a breakdown in trust between citizens and government officials who were in charge of negotiating trade deals. We should not be surprised that trade deals create a lot of anxiety among ordinary citizens, whose lives are touched in all sorts of ways by FTAs – from the food on supermarket shelves to the provision of health services to the protection of personal online data. Trade agreements can also lead to dramatic economic shifts and privilege certain industries over others, leading to economic uncertainty, which so often hits the poorest the hardest. These are all reasons for why it is essential that our post-Brexit trade policy builds consensus and commands democratic support.

Polling shows that British voters have particular concerns about the impact of trade deals on food and environmental standards, as well as concerns about public health and protecting the NHS. 80 per cent of voters would not accept chlorine-washed chicken or hormone-fed beef, and a majority of voters in areas which supported leaving the EU in the 2016 referendum – including those on lower incomes – support regulation on businesses to maintain high standards.^[2] Polling also shows that consumers do not want animal welfare standards lowered and this is consistent across regions, age and socio-demographic groups, including 76 per cent of C2DEs and 74 per cent of ABC1s, showing that even consumers with lower incomes still value high standards.^[3]

It is important that these concerns of ordinary voters are reflected in the development of our trade policy after Brexit. This is perhaps why five parliamentary committees, including the International Trade Committee and the Lords Constitutional Committee, have called for fundamental reform to the way trade deals are negotiated. As things stand, MPs get no guaranteed debate or vote on new trade deals, there are no requirements on transparency, and the government can begin, conduct and conclude negotiations without notifying MPs or the public.

In order to build consensus and ensure that the UK’s post-Brexit trade policy is fully transparent and democratic, the government should set out legislation which includes:

Before negotiations: Publication of the government’s negotiation objectives and a guaranteed debate and vote for MPs on these objectives.
During negotiations: A high level of transparency, with regular release of negotiating texts after each round.
After negotiations: A guaranteed debate and vote for MPs on the final deal.
Throughout the process: Regular engagement with civil society, including environmental groups, businesses and trade unions, and the publication of an independent Sustainability Impact Assessment.

The process set out above would put democratic values at the heart of the UK’s trade policy after Brexit. Other trade policy concerns – ranging from the environment and data to development and human rights – can be dealt with far more effectively if the underlying framework is democratic, open and transparent. This should be a key priority for the government as it embarks on a new chapter in Britain’s long trading history.

The environment

Climate change presents the biggest challenge facing humanity, and is also a top priority for this government, which has committed to net-zero carbon emissions by 2050. Next year, the UK will host the COP 26 conference, which provides an opportunity for a radical new climate agreement between the world’s leading economies. A Joe Biden presidency in the US makes this vision even more tangible. However, despite broad consensus about the importance of tackling climate change, there have been few attempts to ensure that the UK’s post-Brexit trade policy is in line with these ambitions.

Trade policy impacts directly on the environment in a number of ways. In a general sense trade deals tend to act as a blunt instrument, aimed at increasing trade overall. This is problematic because it can lead, for example, to growth in high-carbon industries. However, the specific provisions of trade agreements can also mitigate against climate action. Two particularly important avenues are environmental regulation, including regulatory cooperation, and the use of investor courts to challenge environmental policies.

Environmental regulation

Approaches to regulation differ significantly between countries and the EU and the US have emerged as two different poles: the former gives greater weight to the precautionary principle, the latter to a ‘science-based’ approach. A significant policy choice for the UK as it negotiates new trade agreements is therefore which pole it chooses to align with, but it has yet to take a clear position. A number of provisions at the WTO already constrain the ability of member countries to regulate, for example by requiring that regulation be “no more trade-restrictive than necessary” for achieving “legitimate policy objectives.”^[4] These rules have, for example, already seen Canada scale back its renewables programme.

Trade deals tend to go further and increasingly aim to align regulations between countries, which can create a downward pressure on standards which are designed to protect the environment and lead to a ‘race to the bottom’. This is because trade deals are designed to promote trade rather than achieve environmental objectives: environmental chapters of trade agreements tend to be unenforceable, while regulations which limit trade – even if designed for important, environmental reasons – can be legally challenged and the findings of dispute settlement bodies enforced. Furthermore, trade deals increasingly include the establishment of ‘regulatory cooperation chapters’. In order to implement these chapters, regulatory cooperation ‘councils’ are established as forums for regulators from the different parties to meet and cooperate in the development of regulations in ways that promote trade rather than raise standards, sometimes with special access for business groups.^[5]

Investor courts (ISDS)

The UK is a signatory to various agreements that contain investor-state dispute settlement (ISDS) provisions, which allow investors to sue governments for introducing regulations, which harm their profits. ISDS has been used to challenge all sorts of environmental policies around the world; including a US firm challenging a ban on fracking under the St.Lawrence river in Quebec, a Swedish energy firm challenging water pollution regulations in Germany, various mining firms challenging restrictions on mining across the Global South, and threats to challenge measures to phase out fossil fuel use in the Netherlands.^[6] Evidence shows that ISDS has led to the US delaying the introduction of environmental regulations.

A better way?

Whilst the trade system has not so far responded adequately to the climate crisis, the foundation stones for action already exist. In the first paragraph of the founding agreement of the WTO, signatories recognise that trade rules should allow for “the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development.”^[7] And whilst they are neither binding nor enforceable, there is an increasing trend to include environmental chapters in trade agreements.

Some countries are already choosing to build on these foundations to create a new model for trade agreements: New Zealand has teamed up with Costa Rica, Fiji, Iceland, Norway and Switzerland to negotiate an ‘Agreement on Climate Change, Trade and Sustainability’ (ACCTS). ACCTS is the first serious multilateral attempt at ensuring that trade does not lead to environmental damage. The UK should consider joining the deal and pushing for it to go further in terms of coverage and the enforceability of its provisions.

There are a number of tangible steps the UK could take to put climate at the heart of our post-Brexit trade policy. First, the UK’s new trade deals should be subordinate to our environmental commitments – including the Paris Climate Agreement. Shared ambitions on climate, biodiversity, energy, food and other standards should not be confined to the preamble or separate chapters of trade deals, which are unenforceable, but should be given equal enforceability. These chapters should make clear that trade deals are subject to the implementation by both parties of multilateral environmental agreements and that if trade measures put the parties in breach of those agreements, a specific process with potential sanctions will be triggered. Mechanisms that could be used to achieve enforceability might include: a process of mediation seeking to address issues amicably, a transparent arbitration process with opportunities for a broad range of stakeholders from both countries to engage and, as a last resort, the potential for unilateral sanctions to be imposed, for example the suspension of trade preferences including raising tariffs. Similarly, the UK should have a policy of conditionality, such that we only sign deals with countries that have signed and are implementing the Paris Climate Agreement. This would ensure that trade is prioritised with partners who share our values, and also provide an incentive for new partners to commit to climate action. It could be applied flexibly for developing countries, or for partners who can demonstrate good progress, with accompanying support to help those that need it.

The UK should then undertake an environmental audit of the provisions of its rollover agreements with a view to ensuring all aspects of deals are aligned with its climate ambition and design the detail of its trade agreements to ensure that they support climate action. Some elements of trade deals are already clearly in contradiction with such action. Public outrage about ISDS, as well as opposition from environmental NGOs, has already encouraged some countries to rethink the investment provisions in their trade agreements. South Africa has cancelled all Bilateral Investment Treaties, New Zealand no longer includes ISDS provisions in its trade deals and countries like India and Malaysia are designing alternative approaches. The UK should similarly exclude ISDS from existing and future agreements. This would ensure that companies cannot challenge regulations which are essential for tackling climate change, including those on emissions, fracking, energy production and transport. Second, the UK should commit to avoiding regulatory cooperation in trade deals, as it is currently done, and instead seek standard-raising cooperation in alternative forums with full transparency and engagement from civil society. For instance, committing to dynamic alignment with the EU on environmental standards will be crucial after Brexit.

Human rights

The third pillar of a sustainable trade policy is human rights. The rise of authoritarian regimes, notably China, as well as division and fragmentation in Western democracies, pose a threat to human rights around the world. Trade is intertwined with human rights, and global supply chains can fuel large-scale abuses – from the mass incarceration of Uyghur Muslims in Xinjiang to modern day slavery in India. Evidence shows that Western multinationals are often indirectly implicated in these abuses: for example, recent research identified 83 well-known brands which benefit from the use of Uyghur workers caught in potentially abusive labour transfer programs, including Nike, Adidas, Google and Marks & Spencer.^[8] Similar concerns have been raised about labour rights in supply chains across Asia, Africa and South America.

Human rights are also intrinsically connected to sustainable development. As the world reels from the economic and public health impact of the COVID-19 pandemic, and prepares to confront the catastrophic impacts of climate change, developing countries are by far the most vulnerable. The UK has long been a global leader in international development, and Brexit could be an opportunity to build on this. Moreover, a poorly designed trade policy risks undermining the UN Sustainable Development Goals. However thus far there is little evidence that the Conservative government is taking up this opportunity. It has rolled over the EU’s preference scheme for the world’s poorest countries, which should help to provide continuity as the UK exits the EU. However, it has not taken the opportunity to improve these schemes, for example by offering more generous rules of origin to help support regional trade and make it easier for producers to benefit from the schemes. It has also agreed trade deals with Kenya and Cote d’Ivoire, rather than negotiating with regional blocs; this is hugely problematic as it will disrupt trade in the EAC and ECOWAS regions. Finally, the Government has not yet clarified whether it will seek to pursue negotiations on issues beyond goods, something that most developing countries have long resisted.

Trade policy has significant implications for trade and sustainable development. In addition to abuses in supply chains, trade deals can hinder the ability of governments to raise standards in areas such as labour rights, gender rights, economic justice and public health. ISDS cases have been used to challenge minimum wage rises and health measures such as bans on plain packaging for cigarettes and the introduction of a sugar tax.^[9] Provisions in areas such as services and procurement tend to be blind to the different impact of changes in those areas on men and women. Liberalisation of services can lead to increased privatisation or reduced provision of ‘less lucrative’ services or in poorer areas, which can in turn lead to increases in cost or a requirement for greater care in the home, the burden of which is more often borne by women.^[10]

The UK must put human rights and sustainable development at the heart of its post-Brexit trade policy. In practice, this will require a number of changes: first, trade negotiations with developing countries must prioritise the countries’ development objectives and be done in such a way as to facilitate regional trade; for instance, the UK should offer the same preferences and opportunities to all countries in the East Africa trade bloc, rather than negotiate trade agreements which have the potential to lead to a ‘race to the bottom’ on standards and tariffs. In order to achieve this, the Department for International Trade needs to continue to operate in partnership with former DfID staff in the newly formed Foreign, Commonwealth and Development Office (FCDO). Second, the UK must develop a clear strategy for its relationship with developing countries through a transparent process which engages with civil society in the UK and developing countries, including trade unions, NGOs and businesses to ensure a broad range of interests are represented.

Lastly, prioritising human rights will require looking beyond trade. The UK should support recent efforts at the UN for a Binding Treaty on Business and Human Rights and consider primary legislation to enforce compliance amongst British companies operating overseas, as well as bilateral action with the EU. As things stand, human rights chapters in trade agreements tend to be unenforceable, and the UK is very willing to conduct trade with countries whose leaders have been accused of gross human rights abuses, such as Saudi Arabia.^[11] As with climate change, enforceable chapters in trade deals as well as rights-based conditionality for trade will be essential for ensuring that our trade policy protects human rights.

Taking back control

Brexit gives the UK a once in a lifetime opportunity to reimagine our trade policy. Now is the time to decide what values should be enshrined at the heart of our trading system and pursue cooperation with our neighbours in addressing the global challenges ahead. Chief among these are climate change, the defence of human rights and sustainable development. The UK must take these challenges seriously and join with countries and initiatives that are already seeking to address them. Taking back control of trade policy, if done well, could lead to a better future for people and the planet.

Ruth Bergan is Senior Adviser at the Trade Justice Movement. She has worked in trade policy for over ten years and has written in-depth reports on trade with the US and developing countries, investment protection provisions and the implications of trade policy for action in areas including climate change and gender equality. She has previously worked in the areas of labour rights in international supply chains, migration and gender equality.

David Lawrence is Senior Political Adviser at the Trade Justice Movement. He previously worked in Parliament for a Labour MP and studied at Oxford and the London School of Economics. He has written on trade, politics and foreign policy for the Independent, Politics Home and Foreign Policy Centre.

^[1] See, for instance, analysis done by Ha-Joon Chang on the British Empire’s use of tariffs; Chang, Ha-Joon. 2002. Kicking Away the Ladder: An Unofficial History of Capitalism, Especially in Britain and the United States. Challenge 45:63–97.

^[2] YouGov, Results – US Trade Deal, June 2020, https://docs.cdn.yougov.com/1xr2pyf6fi/YouGov%20-%20US%20trade%20deal%20Results.pdf; Unchecked UK, Attitudes of Younger Leave Voters to Regulation and Deregulation, May 2020, https://www.unchecked.uk/wp-content/uploads/2020/05/Attitudes-of-Younger-Leave-Voters-to-Regulation-and-Deregulation.pdf

^[3] Agriland, RSPCA poll reveals 75% want ban on lower welfare standard imports, August 2020, https://www.agriland.co.uk/farming-news/rspca-poll-reveals-75-want-ban-on-lower-welfare-standard-imports/

^[4] World Trade Organization, Agreement on Technical Barriers to Trade, 1995, https://www.wto.org/english/docs_e/legal_e/17-tbt_e.htm

^[5] David Lawrence, Dynamic Alignment and Regulatory Cooperation between the UK and the EU after Brexit, Trade Justice Movement, September 2019, https://www.tjm.org.uk/documents/briefings/TJM-Dynamic-Alignment-and-Regulatory-Cooperation-after-Brexit.pdf

^[6] Details on ISDS cases brought against environmental regulations can be found in: Ruth Bergan, Shaping Future UK Trade Policy: Investment Protection Provisions, Trade Justice Movement, September 2020, https://www.tjm.org.uk/documents/briefings/Shaping-Future-UK-Trade-Policy-Investment-Protection-Provisions.pdf

^[7] World Trade Organization, Marrakesh Agreement Establishing the World Trade Organization, 1994, https://www.wto.org/english/docs_e/legal_e/04-wto_e.htm

^[8] Business and Human Rights Resource Centre, China: 83 major brands implicated in report on forced labour of ethnic minorities from Xinjiang assigned to factories across provinces; Includes company responses, March 2020, https://www.business-humanrights.org/en/latest-news/china-83-major-brands-implicated-in-report-on-forced-labour-of-ethnic-minorities-from-xinjiang-assigned-to-factories-across-provinces-includes-company-responses/

^[9] Ruth Bergan, Shaping Future UK Trade Policy: Investment Protection Provisions, Trade Justice Movement, September 2020, https://www.tjm.org.uk/documents/briefings/Shaping-Future-UK-Trade-Policy-Investment-Protection-Provisions.pdf

^[10] Trade Justice Movement, Patriarchy and Profit: A feminist analysis of the global trade system, September 2018 https://www.tjm.org.uk/resources/reports/patriarchy-and-profit-a-feminist-analysis-of-the-global-trade-system

^[11] Patrick Wintour and Luke Harding, UK on collision course with Saudis over new human rights sanctions, The Guardian, July 2020, https://www.theguardian.com/law/2020/jul/06/dominic-raab-to-annouce-uk-sanctions-against-human-rights-abusers

Topics

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United Kingdom

The ethics of offensive cyber operations

Article by Dr Joe Devanny

Turn off the lights in Moscow? This is just one of the possible uses of offensive cyber operations (OCOs) briefed to the press by senior British defence sources.[1] Put simply, OCOs ‘project power to achieve military objectives in, or through, cyberspace.’[2] In everyday language, we are talking about ‘cyber attacks’ – from knocking websites offline to disabling computers on a network, shutting down a power grid, manipulating centrifuges in uranium enrichment facilities, or undermining an adversary’s air defences.

Over the last decade, the UK government has talked more openly about its cyber capabilities.[3] The latest step was the Prime Minister’s recent avowal of the National Cyber Force (NCF), which has been operational since April.[4] Uncertainty remains, however, about the role of OCOs in wider UK strategy and how our political leaders are navigating the complex choices involved in deciding when to use cyber operations to secure national objectives and project British values overseas. For example, should OCOs only target an adversary’s defence and security infrastructure, or should the UK follow the contemporary trend in targeting civilian infrastructure, as implied in the Moscow scenario briefed to the press?

There is a burgeoning academic literature on covert action as an instrument of state policy.[5] There is also an extensive and growing literature on the legal and strategic issues raised by state and non-state cyber operations.[6] Cyber operations during an armed conflict are covered by the existing law of armed conflict, and should abide by the principles of necessity, distinction, proportionality and unnecessary suffering. Much cyber activity, however, takes place beneath this threshold. Domestic legislation – the Intelligence Services Act (1994) and the Investigatory Powers Act (2016) – provides the process for senior ministers to authorise operations such as equipment interference where these are deemed to be necessary, proportionate and have a sound legal basis in the interests of national security, economic well-being, and the detection or prevention of serious crime.

The joint nature of the NCF, combining personnel from GCHQ, the Ministry of Defence and other agencies, is an efficient use of limited expertise in this field: it houses under one roof, so to speak, the capability to operate under these different operational authorisations.[7] Whilst the UK has committed to abiding by international law in its conduct of cyber operations, there is legal uncertainty about when precisely OCOs should be regarded as reaching the level of a use of force.[8] Must they cause injury or physical damage, or could, for example, serious economic damage or the degradation of military infrastructure be sufficient to be interpreted as a use of force?

Whilst there is an international debate about the legal status of OCOs as a use of force or as an otherwise prohibited intervention in the sovereign affairs of another state, less attention has focused on the specifically ethical dimensions of political decisions to approve OCOs.[9] This piece aims to stimulate further ethical debate about OCOs as the NCF emerges as an instrument of the UK’s wider national security strategy. Whilst there is not yet a substantial literature applying moral philosophy to this issue, there is no shortage of theories and traditions to draw on. One obvious step would be to apply the principles of ‘just war’ theory directly to cyber operations, another to frame discussion around acceptance or rejection of a realist approach to cyber dilemmas facing political leaders, according to which the UK should develop formidable offensive cyber capabilities and be prepared to use them to enhance national power and security.

As a shortcut, I employ Max Weber’s distinction between the ethics of conviction and the ethics of responsibility, and the importance of the latter in exploring the challenges of political leadership.[10] Put simply, as voters we do not expect our elected leaders to make decisions solely on the basis of their personal beliefs. They should be mindful of a duty to act in accordance with the best interests of the nation – and perhaps with some broader conception of the common good, including global public goods. Defining the national interest is, of course, a contested, inherently political act. Nonetheless, political leaders are morally responsible for the consequences of their actions and omissions in pursuit of their conception of the national interest, however imperfectly articulated or socially divisive it might be.[11]

Political leaders are not the only moral agents involved in this OCO process. Officials and military officers have responsibilities for: shaping the processes that determine strategic priorities for intelligence collection, effects operations and the development of capabilities; producing submissions and plans for specific OCOs; and shepherding the equities process to determine whether vulnerabilities uncovered by UK cyber operators are retained for offensive or surveillance purposes, or are disclosed to enable patching, enhancing the global public good of systemic cyber security.[12]

A typology of offensive cyber and its ethical dilemmas

At this point, it is perhaps useful to explore a typology of activities that are pursued under the umbrella term OCO. In a recent speech, former National Cyber Security Centre chief executive Ciaran Martin proposed an escalating ‘five tier structure of cyber warfare’, conveniently forming a mnemonic acronym, HACKS.[13] Martin’s lowest level is hacking in support of national security objectives, gaining access to adversaries’ electronic devices, possibly degrading or deleting content. The second tier is ‘adversarial infrastructure destruction’ in which digital infrastructure, such as a terrorist organisation’s online propaganda network, is destroyed. The third tier is ‘counter-influence’ operations, essentially the use of OCOs to achieve deterrence. The fourth tier is ‘kinetic’ attack, a cyber operation that causes significant damage to specific infrastructure, for example disrupting the electricity supply to a city (the Moscow example above) or taking a television network off the air. Finally, the fifth and highest tier is system-wide, all-out cyber attacks on military and civilian targets during an armed conflict that sees cyber used as part of integrated operations.[14]

The HACKS model is useful because it highlights the spectrum of severity on which any OCO can be placed. It also demonstrates the variety of ethical dilemmas posed by different OCOs, where some proposed operations are likely to command more universal agreement that they are morally justified. Few would argue against (appropriately authorised) cyber operations that disrupted the digital command-and-control infrastructure used to direct a terrorist attack or to mastermind a global ransomware campaign. Far more would question whether it could ever be ethical, or indeed lawful, for the UK to attack an adversary’s national power grid or civilian air traffic control system.

Another way of thinking about this is to simplify Martin’s structure – losing the HACKS mnemonic in the process, alas – so that the typology of OCOs is reduced to three tiers: skirmishing; strategic ‘cyber solo’ operations; and cyber operations integrated with non-cyber operations during an armed conflict.[15] At the basic level of skirmishing, states and other actors are competing for advantage in cyberspace. When a hostile state actor, terrorist or organised crime group uses digital infrastructure directly or indirectly to harm the UK – whether that harm is electoral interference, disinformation, preparation for an armed attack, or running a ransomware campaign – then the Government should have a relatively easy time justifying the necessity and proportionality of a counter-cyber operation to degrade, disrupt or destroy the digital infrastructure used by these hostile actors. Skirmishing could aim to pre-empt an attack, prevent a ransomware campaign, or punish a hostile state actor or its proxy, increasing the ‘tactical friction’ and ‘strategic cost’ faced by the UK’s cyber adversaries.[16] This tier includes operations to take down disinformation websites, as has been recently reported in efforts to counter anti-vaccine ‘fake news’.[17] The dilemma is harder if an adversary’s digital infrastructure is hosted in a state unaware of the malign activity. Ordinarily, we would expect the UK government to work with the government of that state to resolve the issue, but, in extremis, there would be a clear ethical case that it would be proportionate and necessary to conduct a specific and limited OCO to eliminate an imminent threat, even though that constituted a covert breach of the other state’s sovereignty.

The second tier, strategic ‘cyber solo’ operations can be split into two: a lower tier that tries to deter adversaries by signalling that the UK has the capability to use cyber operations against adversaries’ infrastructure, perhaps restricted to defence- and security-related infrastructure, but perhaps not; and a higher tier that actually involves using such capabilities, for example to enforce a red line when the lower tier of deterrence had failed. The interesting thing about this tier is that it inhabits the challenging grey zone of cyber operations that hover below the threshold of armed conflict. Even where the intention is only signalling and not to conduct an attack, the decision must be very carefully considered – not least for the potential that a pre-positioned implant is misinterpreted by the adversary as an indicator of an imminent attack, precipitating a crisis. Depending on the choice of infrastructure targets, this tier also raises broader ethical questions about the sort of internet that the UK should be trying to promote. Does it really want to be in the business of targeting civilian infrastructure, even if only for deterrent effect? Bearing in mind that, for deterrence to be credible, the adversary needs to believe that you will be willing to carry out the attack.[18] This tier of the typology also poses ethical questions about the second-order consequences, or system effects, of targeting infrastructure: does it undermine the rules-based approach to the Internet that the UK upholds elsewhere? Is there value, in other words, to acting in a more Kantian fashion, refusing to pursue civilian infrastructure targeting that, if universalised as the practice of all cyber-capable states, would exacerbate threats to critical infrastructure around the world?

The third tier of OCOs, cyber operations as part of an armed conflict, represent the highest level of possible damage but, paradoxically, pose the fewest new ethical dilemmas. This is because, as the UK has repeatedly emphasised, it considers cyber operations to be subject to the same body of law as other operations during an armed conflict. All such operations can, therefore, be assessed by traditional ethical principles of military necessity, proportionality, discrimination between military and civilian targets, and the requirement to avoid unnecessary suffering. This is the tier in which the UK can rely most confidently on the ethical principles that have evolved over decades of warfare.

This simplified typology encompasses a broad range of tactical, operational and strategic decisions about whether or not to use OCOs. It isn’t clear yet what the proposed balance of missions is for the NCF: will it be primarily a cyber skirmishing force, a deterrent against hostile state actors, or a developer of OCOs to support integrated operations during armed conflict? As outlined above, whatever the priorities of the NCF, each of these decisions is implicitly ethical. An effective ethic of cyber responsibility requires deliberation, technical and strategic understanding that depend on agency (the role and character of individuals) and structure (the impact of routines and processes). These issues may or may not be addressed in the integrated review of security, defence, development and foreign policy. Whether or not they are, the National Security Council (NSC) and Prime Minister should have been using the review’s process to reflect carefully on Britain’s use of OCOs, which would require the application of moral reasoning.

Optimising the ethic of cyber responsibility

One of the biggest challenges facing government is how to structure its underlying processes to provide sufficient support for political leaders to take informed ethical decisions about OCOs in support of national security, economic well-being or countering serious crime. There are already strategic processes that produce requirements and priorities for intelligence coverage, effects operations and capability development, and these will naturally shape the NCF’s priorities. Even with the reported increase in the defence budget, difficult decisions still must be made about the balance of investment between the three tiers of possible missions outlined above. Another issue is raised by the limited pool of top cyber talent: with finite expertise to allocate to different missions, government must decide how to structure its wider cyber workforce, across not only OCOs but also digital espionage and the cyber security work of the NCSC.

A democratic state should configure its structures and processes of decision to guarantee that the relevant moral issues surface sharply in pre-decision debates in the presence of the appropriate (and appropriately-informed and actively-participating) accountable elected figures. Similarly, there is an argument that enhanced legislative oversight might help improve the quality of executive deliberation about OCOs, notwithstanding the need for operational secrecy.[19]

This issue was highlighted in contrasting approaches to US OCOs under the Obama and Trump administrations. The Trump administration reportedly relaxed the tightly-controlled authorisation process exercised by the Obama White House.[20] Trump’s process afforded greater latitude for both US Cyber Command and the Central Intelligence Agency’s clandestine cyber operations.[21] The contrast between administrations highlights the existence of a spectrum on which we can place any executive, according to the relative depth and rigour of its OCO processes.

Notwithstanding criticism of Obama’s process as inflexible, it is clear that he took seriously the ethics of cyber responsibility. Under Trump’s more devolved process, the importance of the responsible leadership exercised by unelected individuals arguably increased, for example head of US cyber command General Paul Nakasone.[22] Whilst the incoming Biden administration might not reset the authorisation process back to the strictures of the Obama era, it may nonetheless reassert a more prominent and hands-on role for the White House in active management of OCOs. This would be equally desirable in the British case, especially where questions exist about the current Prime Minister’s attention to detail and priorities.[23]

A well-formed OCO process should clarify the important ethical dimensions, so that political leaders better understand the decisions they are being asked to take. Insofar as operational urgency permits, these decisions should be taken in the collegial environment of a committee, chaired by the Prime Minister and including the Attorney General and the relevant authorising ministers (the foreign secretary and defence secretary). Something like this process may already exist and even be used prudently by the Prime Minister. It is not imperative that the process be publicly avowed. Operational secrecy is manifestly necessary. But better communication might improve public confidence in the ethics of UK OCOs and that government is striking the right balance between OCOs and the public good of cyber security. Ciaran Martin’s recent speech helped to advance such a public debate about the need to consider the cyber security implications of Britain’s emerging offensive cyber strategy.[24]

Former cabinet secretary Lord Sedwill recently claimed that OCOs were part of a ‘series of discreet measures’ taken by the UK against Russian leaders and their interests after the 2018 Salisbury attack.[25] A hypothetical decision to approve cyber operations against, say, financial infrastructure to target illicit wealth might have been justified, in principle, as a deterrent or retributive act, necessary to protect national interests. This decision – in the grey middle tier of our cyber typology – should, however, balance expected national gains against wider ethical considerations such as the integrity of the financial system – a global public good, from which everyone benefits, including UK citizens. Adverse reputational impact on the UK as a lawful actor, if such an operation was exposed, should also be assessed. This approach would be consistent with the principles that the Government has previously stated would guide its cyber operations, but ambiguity – perhaps deliberate – remains about UK decision making in practice.

Operational exposure or compromise of a capability can lead to more than reputational damage. What happens if capabilities developed to enable British cyber operations are leaked, leading to their use by hostile actors? This hypothetical has a disturbing basis in fact: the widely-reported loss and disclosure of US National Security Agency hacking tools that led to waves of cybercrime, most notably the WannaCry ransomware that ravaged networks across the globe, including the National Health Service.[26] This is a striking example of the potential damage to the public good of cyber security when, rather than disclose vulnerabilities, states secretly buy or develop them for digital surveillance or OCOs.

In principle, there is nothing uniquely cyber-related about this dilemma: it would be dangerous if, for example, lax security at a military facility led to weapons and ammunition falling into hostile hands. The reason that the cyber debate is more urgent is that this has already happened, and the very nature of cyber operations is that adversaries can potentially detect and re-purpose cyber tools for their own ends. There are valid reasons of state for maintaining offensive cyber capabilities, just as there are reasons for retaining digital surveillance capabilities. There is, however, an equal need for rigorous, reflective processes to determine when to prioritise offensive or surveillance objectives over those of cyber security.

Decisions about the size and structure of national cyber forces are inherently political. They reflect an executive’s risk appetite, prioritisation of objectives, and understanding of the system effects of approved operations. In some ways, ethical dilemmas are identical to other domains, e.g. the choice between counterforce (military) and countervalue (civilian) targeting. But in others, particularly the middle tier of our typology, the precision and non-lethality of OCOs potentially obscures their second-order effects. For example, a targeted operation against one bank account, or the non-disclosure of a vulnerability to use it for a specific offensive cyber operation, can be seen to achieve a specific and limited national objective, but how should political leaders weigh the broader implications and risks, such as eroding a global public good – cyber security or the integrity of financial infrastructure? As one former senior GCHQ official noted after the NCF announcement, offensive cyber has its place in national strategy, but it should not distract from the imperative to improve cyber security.[27]

Recommendations

An effective ethic of cyber responsibility requires active and informed political leadership. This entails clear and sustained commitment from political leaders, but also that the right processes are available to ensure that the underlying risks are understood. Technical knowledge is needed to make informed decisions, but these decisions are ultimately political and freighted with moral considerations. To this end, a ministerial cyber sub-committee of the NSC should be reconstituted and it should meet regularly to review the totality of cyber strategy, including updates on current OCO. It should act as a forum for deliberation and decision about the dynamic balance between the different aspects of national cyber strategy. The ethical case for tier 1 (cyber skirmishing) and tier 3 (cyber operations during armed conflict, supporting integrated operations) missions is most compelling. There is a strategic imperative for both missions and it will be for ministers to decide how to balance these competing priorities for the NCF’s capability development and operational activities. Tier 2 operations, including deterrent signalling of capabilities to undermine critical infrastructure, are ethically and legally more complex, to say nothing about their strategic efficacy. More research is needed about how the NCF might best incorporate tier 2 missions within its remit, without prejudice to its other missions.

The current vulnerabilities equities process, which only escalates the hardest cases to secretary of state level, should in future be placed formally under the NSC cyber sub-committee, to provide regular ministerial review of the findings of the official equities process. This improvement in ministerial engagement with the equities process is arguably worthwhile given the possibility of more disagreement in future at official level, as the NCF becomes a more active player in generating and seeking to retain vulnerabilities for offensive purposes. As the equities process diverges from its origins as a predominantly espionage- or security-focused debate, GCHQ-driven system, there is the potential for sharper disagreements about releasing or retaining vulnerabilities – particularly between NCSC and NCF if the latter pursues tier 2 targeting of civilian infrastructure. Given the strategic significance of these questions, it is right that ministers should take a more active interest in this process.

At this broader strategic level, it would also be advantageous to streamline existing ministerial cyber responsibilities. Whilst the most sensitive cyber operations will continue to be authorised by the foreign or defence secretaries, in dialogue with and after input from the Prime Minister’s and Attorney General’s respective offices, there is a strong argument for improving the quality of more continuous ministerial engagement with overall cyber strategy by creating a network of joint ministers of state across several departments with cyber-relevant operational and policy remits, e.g. between the Cabinet Office, Ministry of Defence, Foreign, Commonwealth and Development Office (FCDO), the Home Office and Department for Digital, Culture, Media and Sport. Cyber issues are complex and interconnected: a network of ministers empowered to focus more intensely on these issues, understanding the cross-departmental overlaps and dilemmas, would improve the quality of ministerial involvement in and active management of this process.

Regarding wider oversight, it is welcome that the Intelligence and Security Committee of Parliament (ISC) will assume oversight of the NCF. This will, however, surely require uplift in the resources and independent expertise at its disposal, notwithstanding the Prime Minister’s stated belief that it is already ‘well equipped’ to perform this task.[28] The ISC should also draw more of its secretariat from outside the operational community which it oversees. Whilst the mechanics of ISC oversight of the NCF are presumably still a work in progress, the Committee should also consider the benefits of conducting (and publishing some of the findings of) an annual review of the equities process, providing further oversight and improving public confidence in the accountability of that significant part of UK cyber strategy.

As with other areas of defence strategy, the UK does not have the resources to exercise cyber power in the same league as the US. It must carefully balance its investment and deployment of top talent across all cyber missions. There are limits to what the UK can realistically achieve. Its allocation of resources must be guided by an incisive strategic assessment of national priorities. Such a strategic audit of the offensive cyber workforce and its mission priorities should be conducted following the agreement of national strategic objectives in the integrated review, as part of the next iteration of national cyber strategy due in 2021.[29] It should also be actively overseen by the proposed ministerial cyber sub-committee of the NSC. Furthermore, this review should be pursued explicitly within an alliance context. As with the FIVE EYES partnership in digital espionage, the UK should collaborate and, as far as possible, deconflict with the US and other close partners to ensure that the alliance derives optimum value from the UK investment in offensive cyber capability development and its conduct of OCOs.

Conclusion

In an ideal world, all cyber-capable state actors would agree not to target civilian critical infrastructure or to undermine the integrity of global public goods in cyberspace. Achievement of such agreement would be an incontestable victory for multilateral cyber diplomacy, delivering better norms of cyber competition between states – notwithstanding the severe difficulties that would await any formal verification process. In reality, however, unless adversaries – and perhaps also allies, in keeping with the interdependent nature of cyber competition – change their behaviour, it is possible that tier 2, primarily deterrent operations might well form an important part of the new NCF’s mission.[30]

With this caveat, the UK is arguably better off prioritising its limited high-end cyber resources on tier 1 and tier 1 missions, concentrating on counter-cyber skirmishing and the development of counterforce capabilities to support integrated operations during armed conflict, rather than pursuing a countervalue approach to targeting civilian infrastructure. This is consistent with international law, as well as with British values and the liberal way of war, described by John Stone as being ‘concerned with breaking things as an alternative to killing people’.[31]

In exercising the ethic of cyber responsibility, our political leaders should apply a principle of ‘minimum effective offensive cyber capability.’ The global public good of cyber security, from which everyone benefits, should be prioritised wherever possible. This is particularly the case in the equities process, only retaining the capabilities to conduct a carefully selected number of offensive operations and weighing seriously the potential risks that these capabilities would pose if the escaped into the wild. That these capabilities should be well protected is a given, but their very engineering should reflect on the damage caused by uncontrolled, self-propagating viruses. A responsible state cyber power should act in a more restrained and discriminating manner. The UK should be able to compete with and successfully deter less responsible or restrained cyber powers, such as Russia, without compromising our principles and pursuing a similar turn countervalue targeting of civilian infrastructure.[32]

Dr Joe Devanny is a lecturer in the Department of War Studies, King’s College London, and deputy director of the Centre for Defence Studies at King’s. He writes here in a personal capacity. Joe was previously programme director for security at Ridgeway Information, a King’s spinout company, and a research fellow at the International Centre for Security Analysis, part of the Policy Institute at King’s. Prior to this, Joe was a postdoctoral researcher on the contemporary history of Whitehall, a joint project between King’s and the Institute for Government. Before this, Joe was a UK civil servant working on national security issues.

Image by Cabinet Office under (CC).

[1] Caroline Wheeler, Tim Shipman and Mark Hookham, UK war-games cyber attack on Moscow, The Sunday Times, October 2018, https://www.thetimes.co.uk/article/uk-war-games-cyber-attack-on-moscow-dgxz8ppv0

[2] Ministry of Defence. 2016. Cyber Primer (2^nd Edition). Shrivenham: Development, Concepts and Doctrine Centre: 54.

[3] David J. Lonsdale. 2016. Britain’s Emerging Cyber-Strategy. The RUSI Journal 161, no.4: 52-62.

[4] Gordon Corera, UK’s National Cyber Force comes out of the shadows, BBC News, November 2020, https://www.bbc.com/news/amp/technology-55007946

[5] Elizabeth E. Anderson. 1998. The Security Dilemma and Covert Action: The Truman Years. International Journal of Intelligence and Counterintelligence 11, no.4: 403-427; Austin Carson and Keren Yarhi-Milo. 2017. Covert Communication: The Intelligibility and Credibility of Signaling in Secret. Security Studies 26, no.1: 124-156; Austin Carson. 2018. Secret Wars: Covert Conflict in International Politics. Princeton, N.J.: Princeton University Press; and Rory Cormac. 2018. Disrupt and Deny: Spies, Special Forces, and the Secret Pursuit of British Foreign Policy. Oxford: Oxford University Press.

[6] Michael Schmitt (ed.). 2017. Tallinn Manual 2.0 on the International Law Applicable to Cyber Operations (2nd ed.). Cambridge: Cambridge University Press; Brandon Valeriano, Benjamin Jensen and Ryan C. Maness. 2018. Cyber Strategy: The Evolving Character of Power and Coercion. Oxford: Oxford University Press; Ben Buchanan. 2020. The Hacker and the State: Cyber Attacks and the New Normal of Geopolitics. Cambridge, MA: Harvard University Press; and the various contributions to the Fall 2020 edition of the Texas National Security Review, https://tnsr.org/volume-3-issue-4/

[7] Marcus Willett, Why the UK’s National Cyber Force is an important step forward, International Institute of Strategic Studies, November 2020, https://www.iiss.org/blogs/analysis/2020/11/uk-national-cyber-force

[8] Jeremy Wright, Speech: Cyber and International Law in the 21st Century, May 2018, https://www.gov.uk/government/speeches/cyber-and-international-law-in-the-21st-century; Jeremy Wright, Speech: Attorney General’s speech at the International Institute for Strategic Studies, January 2017, https://www.gov.uk/government/speeches/attorney-generals-speech-at-the-international-institute-for-strategic-studies

[9] Randall R. Dipert. 2010. The Ethics of Cyberwarfare. Journal of Military Ethics 9, no.4: 384-410; Edward T. Barrett. 2013. Warfare In A New Domain: The Ethics Of Military Cyber-Operations. Journal of Military Ethics 12, no.1: 4-17; and David J. Lonsdale. 2020. The Ethics of Cyber Attack: Pursuing Legitimate Security and the Common Good in Contemporary Conflict Scenarios. Journal of Military Ethics 19, no.1: 20-39.

[10] Max Weber. 2000. The Profession and Vocation of Politics. In Political Writings. Cambridge: Cambridge University Press: 309-369.

[11] Arnold Wolfers. 1952. “National Security” as an Ambiguous Symbol’. Political Science Quarterly 67, no.4: 481-502; Bob Jessop. 2015. The State: Past, Present, Future. Cambridge: Polity: 51.

[12] An outline of the UK equities process, its decision and oversight arrangements, has been published by GCHQ: The Equities Process, November 2018, https://www.gchq.gov.uk/information/equities-process

[13] Ciaran Martin, Cyber-weapons are called viruses for a reason: Statecraft and security in the digital age, King’s College London, November 2020, https://thestrandgroup.kcl.ac.uk/event/ciaran-martin-cyber-weapons-are-called-viruses-for-a-reason-statecraft-security-and-safety-in-the-digital-age/

[14] UK Ministry of Defence. 2020. The Integrated Operating Concept 2025: 10.

[15] Dipert, The Ethics of Cyberwarfare: 403; David Betz and Tim Stevens, 2011. Cyberspace and the State: Toward a Strategy for Cyber-Power. London: Routledge for the International Institute for Strategic Studies: 97.

[16] The quoted phrases are taken from the Command Vision of US Cyber Command, which provides a concise statement of the current US offensive cyber strategy. See: US Cyber Command, Achieve and Maintain Cyberspace Superiority: Command Vision for U.S. Cyber Command, April 2018, https://www.cybercom.mil/Portals/56/Documents/USCYBERCOM%20Vision%20April%202018.pdf

[17] Lucy Fisher and Chris Smyth, GCHQ in cyberwar on anti-vaccine propaganda. The Times, November 2020, https://www.thetimes.co.uk/article/gchq-in-cyberwar-on-anti-vaccine-propaganda-mcjgjhmb2

[18] Martin makes both these points eloquently in his speech: Cyber-weapons are called viruses for a reason, 10.

[19] Joe Devanny, Richard Brown, Grant Christopher, Michael Endsor and Matthew Zelina, Written evidence by the International Centre for Security Analysis, King’s College London, to the Parliamentary Joint Committee on the National Security Strategy’s Inquiry on Cyber Security: UK National Security in a Digital World, UK Parliament, 2017, http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/national-security-strategy-committee/cyber-security-uk-national-security-in-a-digital-world/written/47199.pdf

[20] John Bolton. 2020. The Room Where it Happened: A White House Memoir. New York: Simon & Schuster: 174-175.

[21] Zach Dorfman, Kim Zetter, Jenna McLaughlin and Sean D. Naylor, Exclusive: Secret Trump order gives CIA more powers to launch cyberattacks, Yahoo News, July 2020, https://news.yahoo.com/secret-trump-order-gives-cia-more-powers-to-launch-cyberattacks-090015219.html

[22] Garrett M. Graff, The Man Who Speaks Softly—and Commands a Big Cyber Army, Wired, October 2020, https://www.wired.com/story/general-paul-nakasone-cyber-command-nsa/

[23] Rory Stewart, Lord of misrule: Boris Johnson: an amoral figure for a bleak, coarse culture, The Times Literary Supplement, November 2020, https://www.the-tls.co.uk/articles/boris-johnson-tom-bower-book-review-rory-stewart/

[24] Martin, Cyber-weapons are called viruses for a reason.

[25] Tom Newton Dunn. 2020. UK Targets Putin Allies. The Times, 24 October 2020, Times2 1, 4.

[26] Lily Hay Newman, The Leaked NSA Spy Tool That Hacked the World, Wired, March 2018, https://www.wired.com/story/eternalblue-leaked-nsa-spy-tool-hacked-world/; Nicole Perlroth and Scott Shane, In Baltimore and Beyond, a Stolen N.S.A. Tool Wreaks Havoc, New York Times, May 2019, https://www.nytimes.com/2019/05/25/us/nsa-hacking-tool-baltimore.html

[27] Conrad Prince, On the Offensive: The UK’s New Cyber Force, RUSI, November 2020, https://rusi.org/commentary/offensive-uk-new-cyber-force

[28] Boris Johnson, HC Deb, 19 November 2020, c.496,

[29] John Gearson, Philip Berry, Joe Devanny and Nina Musgrave, The Whole Force by Design: Optimising Defence to Meet Future Challenges, Serco Institute/King’s College London, October 2020: 69.

[30] Paul M. Nakasone, A Cyber Force for Persistent Operations, Joint Force Quarterly 92, January 2019, http://cs.brown.edu/courses/csci1800/sources/2019_01_22_JFQ_CyberRoleForPersistentOperations_ Nakasone.pdf

[31] John Stone. 2013. Cyber War Will Take Place! Journal of Strategic Studies 36, no.1: 106.

[32] Andy Greenberg. 2019. Sandworm: A New Era of Cyberwar and the Hunt for the Kremlin’s Most Dangerous Hackers. New York City: Random House.

Topics

Conflict Resolution and Security

Good Governance and Institutional Reform

Human Rights

International Relations and Geopolitics

Regions

Europe

United Kingdom

Downgrading DFID – How will Britain’s Overseas Development Aid Agenda change now DFID is part of the FCO?

Article by Dr Victoria Honeyman

For the last 23 years, since the birth of the Blair government, a key aspect of British foreign policy, and indeed Britain’s global reputation, has been its overseas development aid (ODA) policy. Blair’s creation of the Department for International Development (DFID) and the increasing budget for that department not only made ODA a key plank within Britain’s foreign policy, but also massively increased Britain’s visibility within the development field, building new relationships with developing nations and many former colonies. By increasing investment in the developing world, Britain was able to create new trade opportunities, rehabilitate its international reputation in the developing world and push its international priorities within a soft power agenda. However, the ODA budget has been under increasing pressure for over a decade, now being reduced to 0.5 per cent GNI following the Autumn Spending Review for the foreseeable future, because of both economic pressures and ideological disagreement in some quarters, primarily the political right. Boris Johnson announced in June 2020 that DFID would be merged into the Foreign and Commonwealth Office (FCO), a move long favoured by many within the FCO and the Conservative cabinet. This article will consider what the implications of this change are likely to be and how the good work of DFID can be continued within the FCO, or whether it will be fatally undermined.

The aims of merger

For supporters of the merging of DFID and the FCO, it is logical for both departments to work as one. If the FCO oversees Britain’s policy ‘overseas’ then Britain’s relationship with developing nations should be part of that. As Johnson highlighted in his speech announcing the merger ‘we tolerate a risk of our left and right hands working independently’.[1] The potential for mixed messages, alongside concerns over value for money are both longstanding arguments for the merger and were both mentioned by Johnson in the House of Commons announcement. With two separate government departments, both acting with different priorities at their heart, the possibility for mixed messaging and conflicting activity is evident. Johnson argued that this conflict, coupled with an overly generous ODA budget meant that UK aid was a ‘giant cashpoint in the sky’.[2]

With the merging of the FCO and DFID, the newly created FCDO will have a much larger budget than the previous FCO even with the reduction to 0.5 per cent GNI, allowing the UK to strategically spent aid money, not necessarily in the poorest countries or on projects, which address the most pressing global need, but on projects which advance the UK’s interests overseas. Quoted in the Guardian newspaper, Oxfam GB’s Chief Executive Danny Sriskandarajah stated: ‘Effectively what he’s saying is, we’re going to use our aid budget to pursue security and diplomatic aims. Those are noble aims, but that’s not what aid is for’.[3] For the Johnson government, aid is another tool at their disposal for pushing Britain’s global agenda and interests, which may be unpalatable for some supporters of Britain’s previous ODA policy, but are not necessarily out of line with the actions of many other Western nations, including Canada and Australia, where self-interest and ODA are very closely linked.

The path forward for aid

The merging of DFID into the FCO has two potentially huge implications. Firstly, by removing the DFID Secretary of State (with those former responsibilities now falling to the FCDO Ministers), the influence and power of Britain’s development aid agenda is reduced, becoming one voice amongst many competing voices. Secondly, the budget of DFID has dwarfed the FCO budget since its creation (standing in 2019 at £15 billion for DFID and £2.4 billion for the FCO).[4] It is likely that this departmental merging will allow the FCDO to spend money allotted to ODA spending in a wide variety of ways, some development orientated, some less so. If the British government want to preserve their hard-won developmental credentials, and that is not necessarily the case, they could ring-fence the newly reduced development budget ensuring that the FCO elements within FCDO do not either directly or indirectly influence ODA spending. However, that seems unlikely considering Johnson’s comments that he wants to the two hands of overseas Britain to work together.[5]

Another potential option for the new department, which might benefit both Britain and the developing nations which it donates aid to, is an explicit statement of Britain’s interests and priorities. ‘Joined up government’, as described by previous Prime Ministers, is a laudable aim, with different government departments working in unison to achieve a singular policy agenda. One way of trying to achieve this is being explicit on what that policy agenda is and potential ways of achieving it. However, if your aims are not altruistic or wedded to global goals (such as the UN Millennium Goals, for example), a public statement outlining your priorities might do more harm than good. A more private statement, shared only within government, would certainly be helpful in outlining your aims, and this is something, which the new FCDO will almost certainly produce.

The subsuming of DFID into the FCO raised concerns amongst those in the development field. Indeed, in response to Johnson’s announcement of his plans, 188 charity organisations wrote to the Prime Minister asking him to reconsider his decision as it was an ‘unnecessary and expensive distraction’.[6] To date, there has been little work by the Johnson government to allay these concerns but it is possible that, once the complex issues of COVID-19 and Brexit have been dealt with, a clarification of Britain’s development aid agenda may be developed. However, there has been no indication that the Government are keen to allay fears or that the merging is simply an administrative reshuffle. Instead, the merger has been presented as a policy change, meaning that the Johnson government may well have abandoned many of the priorities and relationships, which DFID has focused on since 1997. The reduction in ODA funding certainly seems to be playing to the Conservative base and indicates that Britain’s relationship with the developing world is not one which they prioritise, even after Brexit.

Beyond Johnson

Inevitably, Johnson will eventually leave office, as will the Conservatives. Looking beyond the current government, the future of Britain’s relationship with developing nations will be extremely important in a post-Brexit world. While, to some, development aid may be driven by altruism, charitable urges or even colonial guilt, one advantage of Britain’s donor status has been the impact on Britain’s bi-lateral relationships. By building (or buying) good will and strong working relations, ODA funding is a way of Britain creating new markets and new trading links in a strong global marketplace. Any future government will need to consider how important these linkages are, and how much they are willing to pay for them in the future. Once that decision has been made, they will then have to sell that idea to the British public. The 0.7 per cent spend on ODA is enshrined in law, but the reduction to 0.5 per cent GNI ODA under Johnson, with no specific date on when the figure may rise, suggests that development aid is no longer universally accepted by MPs from both main parties as being beneficial to the UK. It is possible, particularly in the light of the financial hardships, which are expected following COVID-19 and Brexit, that a future government might argue that development aid spending was a luxury which Britain cannot afford permanently. The real question is – is Britain’s ODA policy a luxury, which Britain cannot live without?

It seems likely that the merger of DFID and the FCO will eventually enable or encourage a strategic plan on British foreign policy. The merging of the two departments happened while the current strategic planning exercise was ongoing, rather than waiting for its recommendations on completion. Such a planning exercise would be incredibly useful, allowing Britain to really ‘join up’ some elements of its foreign and development aid policy. While altruism is a noble pursuit, many nations have, at least in some part of their ODA policy, an element of self-interest, and ODA and self-interest do not have to run counter to each other. The situation in Yemen had demonstrated the strange juxtapositions, which governments can so easily fall into. Why would a nation such as the UK provide development aid to a nation ravaged by war, while at the same time, providing the very weapons which are being used to terrorise the population? Securitisation has become a key battleground within the developing world and there is some disquiet over developed nations, such as the UK, using their ODA budgets to ‘clean up’ their military activity overseas. Without a clear line of sight, a clear commitment to the developing world and a desire to deal with short-term problems and ‘bumps in the road’ in the pursuit of longer-term benefits, these two policies usually end up being uncomfortable bedfellows, and unfortunately immediate financial benefit usually wins out over longer term potential benefits, even economic ones.

As we enter a new Brexit world, the issue of ‘Global Britain’ also needs some attention here. If Britain is, as successive Prime Ministers have suggested (for example, May at the Conservative Party Conference, Johnson as reported in the New York Times), keen to build trade linkages with members of the Commonwealth and the wider world, cutting development budgets or downgrading the importance of aid projects could be hugely counterproductive.[7] While conditional aid was eliminated from DFID practices in 1997, it would be foolhardy to believe that the spending of millions of pounds of British money in developing nations on important infrastructure projects and societally vital programmes has not been in Britain’s long-term economic interest. Indeed, in 2012, the coalition government introduced a new design for aid being sent from the UK. Each sack, box or pallet was emblazoned with a new ‘Union Jack’ flag, with the words ‘UK Aid’, ensuring all recipients knew who to thank for their charity.[8] The developing world is a growing market and that means there is more competition than ever to monopolise new markets. Without the relationships which DFID and British aid have nurtured, those relationships will be much harder to come by. Even if aid funding returns to the 0.7 per cent level, it is likely that different priorities and accounting will change the nature of funding without a Secretary of State to defend it, meaning that the ‘Global Britain’ brand, and the associated benefits which Johnson is so keen to collect, may well be damaged, the very opposite of his intentions in subsuming DFID into the FCO.

In the much longer term, as is so often the case in government, it is possible that this newly merged department may once again be two separate ministries. DFID could be resurrected again as it was in 1997 (the original Overseas Development Ministry had been created until Wilson but was merged by Heath into the Foreign Office in the early 1970s). However, to do that you would need to have a party and a leader, as you did in 1997, who are really committed to their ODA policy and are clear about what they want that policy to achieve. Without such a commitment, and the money and political capital required to push through such a separation, particularly in the light of resistance from the FCO which would be extremely likely, any plan for separation would fall apart quickly, potentially disabling Britain’s ODA plans.

Conclusion

The merging (or subsuming) of DFID into the FCO was a move long expected by those within the development world. Relentless pressure has been put on DFID since 2010 (and perhaps before), driven by external economic pressures on Britain, cuts in domestic spending, reporting of corruption or the mishandling of DFID funding and ideological objections. Spending large amounts of money overseas is a difficult policy to justify when children are slipping into poverty in the UK, even if that poverty is relative. It certainly is real to those experiencing it. Despite this, DFID and its 0.7 per cent funding has been relatively protected, first by the Cameron government and then the May government, despite expectations to the contrary. The merging of DFID into the FCO was, in some senses, inevitable, and it seems likely that this is a practical outcome of a downgrading of the development aid policy, with the Johnson government keen to pursue more direct investment opportunities. The reduction in the aid budget to 0.5 per cent GNI certainly suggests that foreign aid is not central to the wider foreign policy priorities of the Johnson government. This means the longer term, but potentially more sustained, building of good will, which ODA funding produces, appear to be being sacrificed and downgraded.

With the economic damage of COVID-19 and Brexit, Britain’s ODA budget is already expected to contract in the financial year 2020/21 and the long-term financial future of the policy could be in jeopardy. Like so many projects, its future is dependent on how long Johnson remains in Downing Street and how long the Conservatives remain in office. A Labour government might well be expected to be more sympathetic to protecting and ringfencing ODA funding and policymaking. Commenting on the proposed merger of DFID and the FCO, leader of the Labour Party, Sir Keir Starmer tweeted that ‘abolishing one of our best performing and most important departments diminishes Britain’s place in the world’.[9] However, with worsening economic conditions and global uncertainty, even that is not guaranteed, and it may well be that the merger of DFID and the FCO becomes a permanent feature, at least for the next decade or more. With other nations waiting in the wings to build relationships in developing nations and reap the financial rewards, the developing world cannot and will not wait.

Dr Victoria Honeyman is an Associate Professor of British Politics at the University of Leeds. She writes extensively on the Labour and Conservative parties, particularly focused on British Foreign Policy and Britain’s Overseas Development Aid Agenda. Her last article focusing on the Blair government, ‘New Labour’s Overseas Development Aid Policy: charity or self-interest?’ was published in Contemporary British History. She also works extensively with the media appearing on programmes on BBC Radio Four and Five, BBC Breakfast and France 24.

Image by UK Government under Open Government License.

[1] International Development and Foreign Office to Merge, BBC News, June 2020, https://www.bbc.co.uk/news/uk-politics-53062858

[2] Amy Jones and Harry Yorke, Boris Johnson scraps overseas aid department, heralding end to ‘giant cashpoint in the sky’, Daily Telegraph, June 2020, https://www.telegraph.co.uk/politics/2020/06/16/lockdown-uk-news-update-boris-johnson/

[3] Heather Stewart and Patrick Wintour, Three ex-PMs attack plan to merge DFID with Foreign Office, The Guardian, June 2020, https://www.theguardian.com/politics/2020/jun/16/foreign-office-and-department-for-international-development-to-merge

[4] International Development and Foreign Office to Merge, BBC News, June 2020, https://www.bbc.co.uk/news/uk-politics-53062858

[5] International Development and Foreign Office to Merge, BBC News, June 2020, https://www.bbc.co.uk/news/uk-politics-53062858

[6] Peter Stubley, Boris Johnson urged to reconsider ‘unnecessary and expensive’ DFID merger by almost 200 charities, The Independent, June 2020, https://www.independent.co.uk/news/uk/politics/boris-johnson-dfid-foreign-office-overseas-aid-charity-a9578321.html

[7] Theresa May calls for ‘truly global Britain’, BBC News, October 2016, https://www.bbc.co.uk/news/av/uk-politics-37535867; Mark Landler, Boris Johnson’s ‘Global Britain’: Inspired vision or wishful thinking?, The New York Times, July 2020, https://www.nytimes.com/2020/07/03/world/europe/johnson-brexit-hong-kong.html

[8] New logo: Flying the flag for UK aid, Government website, June 2012, https://www.gov.uk/government/news/new-logo-flying-the-flag-for-uk-aid

[9] Widespread criticism of the government’s plan to merge DFID with FCO, BOND, June 2020, https://www.bond.org.uk/news/2020/06/widespread-criticism-of-the-governments-plan-to-merge-dfid-with-fco

Topics

Brexit

Good Governance and Institutional Reform

International Development

International Relations and Geopolitics

Regions

Europe

United Kingdom

Projecting the UK’s values abroad: Conclusions and recommendations

Article by Adam Hug

The Government’s roadmap for 2020 has not quite unfolded the way they might have initially hoped, with a global pandemic liable to disrupt even the best laid plans. The current delay to the Government’s Integrated Review of Security, Defence, Development and Foreign Policy has been part of adapting to that new reality. Although some of the main outcomes of the Integrated Review, such as the merger of the FCO and DFID, the increase in defence spending and the ODA cuts, have already been announced, the document’s postponement to early 2021 could enable it to play an important role in setting out the Government’s vision for the future as part of a year of action centred around the UK’s leadership of the G7 and COP.

As set out in the introduction the UK should build on its soft power strengths and history as a global hub to position itself as a, or even the, ‘library of democracy’ by providing the necessary tools to support those defending human rights and democracy around the world. To play this role effectively the UK will need not only to protect its world class universities, NGOs and media outlets but to get the Home Office on the same page to better provide sanctuary to activists in need and access for those wanting to study or visit the UK for conferences. UK aid needs to actively support the Government’s Open Societies objectives by supporting human rights defenders and NGOs, with human rights impacts be fully considered when providing development aid. The UK should build on the success so far of the new Magnitsky sanctions and use its new found flexibility outside the EU to act fast in response to emerging crises, taking opportunities for British leadership.

The fight against corruption is an issue that dovetails well with the goal of supporting democracy, given the tendency of kleptocratic autocrats and their hangers on to funnel their money to or through UK jurisdictions. Delivering on overdue legal reforms and enhancing the capacity of institutions working in the sector are crucial, as will be the increasing willingness to use powers such as Unexplained Wealth Orders. Learning the lessons from the UK’s own issues with COVID procurement will be important to boost credibility on transparency and accountability.

The UK’s new trade function needs to be made more accountable to Parliament and the public, with deals containing stronger human rights and environmental protections, as well as a focus on supporting developing country economies to flourish. It should seek to make trade one plank of broader and more comprehensive Strategic Partnership Agreements that combine it with more detailed plans for security, scientific, academic, cultural, aid, and environmental collaboration.

The UK has a lot to do in order to effectively use 2021 to relaunch itself on the world stage but there are a number of recommendations for action that can help it achieve its goals. These might include:

Positioning the UK as a ‘library of democracy’, a global hub for supporting liberal democracy and human rights;
Increasing the use of Magnitsky sanctions, expanding their remit to cover corruption and giving Parliament a role in proposing relevant cases;
Making Parliamentary time available to introduce the Registration of Overseas Entities Bill and planned reforms to limited partnership law;
Improving access to existing public registers and find further ways to connect their information, such as the development of a consolidated national asset registry;
Continuing to expand the investigative capacity of Companies House, the National Economic Crime Centre and its constituent agencies, and increase the use of Unexplained Wealth Orders;
Taking action on libel tourism and repression of international journalists by introducing UK anti-SLAPP legislation and improving conducts codes for lawyers and financial services;
Making trade negotiations more transparent and accountable to Parliament and the public, with deals containing a stronger development focus and more enforceable human rights and environmental clauses;
Integrating trade deals better alongside the UK’s other diplomatic objectives through more comprehensive Strategic Partnership Agreements;
Returning to the legal and manifesto commitment of 0.7 per cent GNI invested in Overseas Development Aid as soon as possible, with a sunset clause in any legal changes;
Improving Parliamentary and Ministerial oversight and setting an ethical framework for the deployment of cyber capabilities, with a focus on defensive and combat support functions; and
Delivering more ambitious commitments for climate action through the UK’s Nationally Determined Contribution, better use of the aid budget and the use of the financial sector, as well as ending government support for fossil fuel projects abroad.

Topics

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Civil Society

Conflict Resolution and Security

Covid-19

Democracy and Elections

Energy, Environment and Resources

Good Governance and Institutional Reform

Human Rights

International Development

International Relations and Geopolitics

Regions

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United Kingdom

FPC Briefing: The social foundations of stable illiberal-populist rule: lessons from Hungary

Article by Dr Gabor Scheiring

November 16, 2020

FPC Briefing: The social foundations of stable illiberal-populist rule: lessons from Hungary

Relying on the author’s recent book, this briefing examines the foundations of Hungary’s stable illiberal rule. Two seemingly contradictory tendencies are crucial for the stability of illiberalism in the country. First, Orbán capitalises on the disillusionment of the working class with the liberal transition era after the fall of Communism. Second, Orbán used the momentum presented by the collapse of working-class support for the parties of the Left to gain power and then to renegotiate the class compromise with transnational elites, emancipating the domestic bourgeoisie at the expense of domestic workers. The stability of the regime increasingly depends on authoritarian-populist fixes. However, despite the crass classism of upwards redistribution under Orbán’s business-friendly regime, a significant part of workers still supports the illiberal state because it presents itself as a break with the pre-2010 liberal era. The briefing also shows that the policy logic behind the government’s responses to COVID-19 corresponds to the controversial logic of Orbán’s socioeconomic strategy. Finally, the briefing concludes by pointing out the broader political lessons from Hungary’s descent into illiberalism.

Introduction

The corona-crisis increased the value of evidence-based policies and revealed the weakness of populists in power. This is most clearly exemplified by Donald Trump in the US. Italy’s Matteo Salvini is also struggling to find his place in the opposition, with Conte’s government performing better than expected. However, other populists seem to be as strong as before. Hungary’s PM Viktor Orbán is a case in point. According to Politico’s poll of polls, the popularity of Orbán’s Fidesz party has been hovering around 50 per cent in 2020.[1] The second wave of the corona-crisis is currently hitting Hungary much harder than the first wave, and the government is currently unable to handle protesting arts students who demand the reversal of the privatisation of their university.[2] Nevertheless, illiberal hegemony is as stable as ever in Hungary.

The problem with most accounts about the stability of illiberal populism in Hungary is that they neglect how well Fidesz is embedded at the bottom and society’s top. Authoritarian fixes—such as gerrymandering, unfair elections, media repression—are crucial parts of the story, but there is more to Orbán’s rule than this. To understand the stability of Orbán’s illiberal rule, we need to understand what happened before the 2010 Fidesz power grab.

In my recent book, ‘The retreat of liberal democracy,’ I analyse two seemingly contradictory tendencies that are crucial for understanding the stability of Orbán’s illiberal regime.[3] First, Orbán capitalises on the disillusionment of the working class with the liberal transition era. Second, Orbán used the momentum presented by the collapse of working-class support for the parties of the Left to gain power and then to renegotiate the class compromise with transnational elites, emancipating the domestic bourgeoisie, often at the expense of domestic workers. Despite the crass classism of upwards redistribution under Orbán’s business-friendly illiberal regime, a significant part of workers still supports the regime because it presents itself as a break with the pre-2010 liberal era.

Postsocialist neoliberalism undermined itself

Hungary’s post-socialist transformation brought new economic and cultural opportunities and coincided with democratisation. However, the overwhelming majority of Hungarians experienced this global economic reintegration as social mayhem. Relying on fieldwork in Hungary’s ‘rustbelt’, I show that de-industrialisation during the 1990s eroded working-class culture and decreased the bargaining power of labour, which in turn stunted wage growth and allowed inequalities to increase. By the end of the 2000s, masses of workers and members of the indebted and weak middle class grew disillusioned. In the lack of a progressive left-wing alternative, they drifted rightward.[4]

De-industrialisation, followed by a long period of jobless growth, and a disappointingly low increase in net wages, pushed the economy towards severe social tensions. 1.5 million Hungarian jobs (out of 4.8 million) were lost during the first years of the regime change, out of which only 0.4 million have been recreated.[5] The employment rate dropped from 71 per cent in 1990 to 52.4 per cent by 1997 and only increased a couple of percentages. In 2009, it stood at 55 per cent, the lowest throughout the European Union (EU).[6]

The share of wages in total national income has decreased from 57.2 per cent to 46.3 per cent during the first 20 years of the transition.[7] The standard of living of a Hungarian with average income corresponds to the bottom ten to 20 per cent of the Western pay scale. A common strategy to extend low wages was consumer credits, buying cars, and apartments financed through foreign currency loans. This strategy was backed and propagated by the Socialist-Liberal government between 2002 and 2010. Low wages and high indebtedness resulted in the financial precarity of Hungarian families. By 2009, a staggering 75 per cent of Hungarians could not face unexpected expenses, the highest level throughout the EU.[8]

The experience of economic vulnerability became profoundly associated with the Socialist-Liberal government, leading to the collapse of the Hungarian Socialist Party’s electoral base.[9] A similar process of working-class demobilisation and right-wing remobilisation took place in other post-socialist countries, most notably in Poland.[10] However, condemning citizens for their alleged populist or anti-democratic turn is misleading. Bringing down democracy not only requires dissatisfied voters; it also needs an active elite that thinks its interest might be best furthered by weakening the system of liberal democracy. Without the support of national capitalists and the transnational economic elites, Orbán’s regime would collapse.

The roots of the alliance between Fidesz and the economic elite also go back to the pre-2010 era. In the 1990-2010 period, Hungary spearheaded the competition for foreign capital in Central and Eastern Europe, offering cheap semi-skilled labour, lax labour regulations, and low taxes on capital.[11] However, the misgovernance of dependent development resulted in severe economic dualism. Transnational corporations generate the bulk of export revenue, while domestic companies lack access to high-value-added markets. Both left- and right-wing governments between 1990-2010 preferred foreign investment as the engine of the economy, at the expense of domestic capital formation.

The neoliberal policy consensus favoring transnational corporations led to profound economic anger within the national bourgeoisie. Those national entrepreneurs who did not manage to become junior partners of international capitalists either as service providers or as local suppliers were increasingly pitted against the dominant bloc of liberally-minded politicians and transnational corporations. Using new data on revolving doors between the business class and the political elite, in my book, I show how this economic disintegration led to rising economic nationalism among Hungarian national capitalists. They started to support Fidesz in return for state protection. Orbán deliver on this promise, making more room for domestic businesses, while also strengthening the alliance with key transnational corporations.

Orbán, a business-friendly populist

Orbán’s illiberal socioeconomic strategy has a lot to offer to the business class. Elsewhere, I proposed the term ‘accumulative state’ and mapped the regime’s instruments to boost wealth and capital accumulation.[12] Domestic elites are a significant pillar of Hungary’s illiberalism. A nationally representative survey found that the number of Hungarians supporting authoritarianism has slightly increased, but the number increased by far the most among upper-class respondents.[13] The share of those supporting authoritarianism grew from six per cent to 23 per cent from 2015 to 2018.

Orbán also restructured some sectors of the economy—typically non-tech non-tradable sectors—making space for domestic investors. The case of the restructuring of the tobacco industry illustrates this well.[14] The tobacco industry was dominated by four companies before the transition. These companies were all privatised during the 1990s, and international investors bought the most prominent companies. A smaller, Hungarian owned company, Continental also managed to establish a foothold in the tobacco industry. The law to “curtail smoking among young and regulate tobacco retail trade” was introduced to the Parliament in December 2011. The lead architect of the law was János Lázár, at that time a close ally to Orbán. The main element of the regulation was that the tobacco trade was monopolised by the state to give out concessions at a later point.

A year later, oppositional MPs noticed by checking the file properties that the Word document sent out to Brussels to the European Commission for consultation was not authored by government officials but by János Sánta—the chairman of the Hungarian Tobacco Alliance, the central lobby body of the industry—who also happens to be manager and owner of Continental Tobacco. The owners and high-level employees of Continental Tobacco are among the biggest winners of the bid for concessions, with more than 1000 new retail outlets run by someone closely connected to Continental. János Sánta was publicly encouraging the company members to take part in the tender and stated that it is a “similar historical opportunity as land redistribution in 1945.”

However, Orbán also maintained the alliance with transnational corporations in the tech-intensive export sectors, representing the economy’s most dynamic sector. Thus, foreign investors are also a crucial pillar of the post-2010 regime, benefiting from Orbán’s illiberal socioeconomic strategy. According to the editor of Budapester Zeitung, 90 per cent of German investors in Hungary would vote for Orbán.[15]

The government introduced a flat nine per cent corporate tax in 2016, effectively transforming the country into a tax haven. One of the most important measures to boost the ‘embourgeoisement’ of the upper-middle class was the introduction of a flat 16 per cent personal income tax in 2011, further reduced to 15 per cent in 2015. The government also distributes direct financial subsidies to national and international business elites; these subsidies vastly exceed the pre-2010 level and are, more than before, targeted towards national capitalists.[16]

Austerity is a further crucial tool to redistribute wealth towards the business class. These cuts funded the massive redistribution to the top in the form of tax cuts, subsidised loans, increased public investment, and new pro-natalist policies targeting high-income families. This socialism for the rich and capitalism for the poor allowed the government to keep the budget deficit below three per cent, bringing state debt down from 80.6 per cent of the GDP to 70.2 per cent between 2009-2019.

Given its deep embeddedness in business circles, it is no surprise that neither national nor international capitalists have challenged the anti-democratic attacks on liberal institutions.

From capital accumulation to authoritarian populist fixes

Orbán’s illiberal strategy brought some limited gains for workers. It allowed employment to rise and reduced families’ vulnerability by curbing financialised consumption and wiping out dubious foreign-currency loans. However, the price of these achievements was an extreme rise in inequality and labour market precarity. The Gini coefficient of income inequality jumped from 24.1 in 2010 to 28.7 in 2018.[17] Hungary is now the most unequal country in the Visegrad region.

This growth of inequality is not an accident by consciously manufactured in the name of Orbán’s illiberal socioeconomic strategy. Between 2009-2017, the social component of individual incomes – e.g., benefits, pensions, allowances – declined dramatically for the bottom income deciles and increased considerably for the top income deciles.[18] The country also saw a highly unequal creation of new wealth. While the value of cash and bank deposits—the only assets that the lower 90 per cent of the population owns—increased by 14 per cent between 2010 and 2015, the value of securities—owned by the top few per cent of income earners—increased by 68 per cent.[19]

Orbán’s labour policy also increased precarity. The government reduced the unemployment benefit to three months, which is the lowest in Europe. In 2012, the government introduced a new neoliberal labour code, disbanded the standing tripartite body, and restricted the opportunity to strike. In 2018, the government increased overtime and allowed companies to postpone payment for overtime to three years. This amendment, labeled as the slave law, led to significant protests throughout the country, but the government did not waver.[20]

Orbán’s socioeconomic strategy is politically costly. Orbán lost a large share of his working-class supporters between 2010-2014. In 2014, Fidesz received fewer votes than in 2006, when they lost the election. As I argued elsewhere, the 2019 local government elections again showed that Orbán’s illiberal hegemony is vulnerable. The opposition was able to take hold of critical large cities.[21] A recent survey conducted before the coronavirus pandemic asking respondents to evaluate the ten years of the Orbán regime reported that 43 per cent of Hungarians think that the country is in a worse state than it was in 2010, and only 30 per cent saw an improvement.[22]

Thus, the stability of the regime increasingly depends on authoritarian-populist fixes. On the one hand, institutional authoritarianism represents the hard, macro-strategy of illiberalism. It aims at pre-empting organised dissent by political parties, trade unions, and NGOs. On the other hand, authoritarian populism represents the soft, micro-strategy of illiberalism. It reframes distributive grievances into cultural hierarchies, thus hinders the emergence of a broad anti-government social coalition.

Authoritarian capitalism meets the pandemic

How is Orbán’s socioeconomic strategy related to how the government handles the corona-crisis? The first wave of the pandemic spared the countries of East-Central Europe, including Hungary.^[23] It seemed that the populist governments of the region were well-equipped to manage a significant health crisis. However, the second wave is now entirely out of control, death and infection rates exceeding the first wave by far. It is becoming evident that Orbán’s government did not use the time available to prepare for the second wave. It is also apparent now that the government’s measures during the first wave of the pandemic had little to do with the relative flatness of the curve at that time.

Although the government introduced significant restrictions on 16 March, with a full shelter-in-place order effective from 27 March, the bulk of the government’s measures included non-conventional steps with dubious efficiency. The measures that target the restructuring of hospitals are particularly controversial. On 11 March, the government decided to freeze all non-coronavirus related admissions to hospitals and treatments except for life-saving ones (¾ of hospital treatments were postponed in the only hospital that provided detailed data about the effect of this measure). If the hospital admissions remain restricted in the following months, the government could save around ten billion forints on hospitals during the pandemic. On 9 April, the minister responsible for health ordered publicly funded hospitals to free up 60 per cent of hospital beds by 19 April to treat expected new coronavirus patients.^[24] Hospital directors who refused to comply fully are threatened, and two renowned hospital directors were dismissed.

Economic measures have been dedicated to alleviating businesses’ financial burden in sectors where national capitalists loyal to the regime happen to be the most active. The government aimed to keep the budget deficit for 2020 below 2.7 per cent for a long time, though now appears to be willing to accept a more massive deficit. This hardline macroeconomic conservativism diverges from the approach of most other governments and the recommendations of international institutions.

The responses in the fields of social and employment policy are also restrictive. Even conservative governments elsewhere in Europe recognise the need to increase spending on social security in response to the coronavirus health crisis, but Viktor Orbán’s government refuses to do so. The only significant policy response alleviating workers’ financial burden is a limited wage guarantee scheme introduced on 8 April. The government covers up to 70 per cent (later increased to 75 per cent) of the lost salary for workers whose work time was reduced by up to 50 per cent (later increased to 75 per cent). To help companies find ‘flexible solutions,’ on 18 March, the government effectively suspended the labour code. This allows companies to diverge from regulations concerning work time, workplace arrangements, and the minimum wage threshold. [25]

Finally, the political responses to the health crisis also include several highly controversial measures. Although the centralisation of executive power is a common approach in crisis management, the Hungarian government went further than most other democratic governments. In a widely discussed move, the National Assembly, relying on the qualified majority of Orbán’s Fidesz party, passed an act that made the previously introduced state of emergency indefinite and allowed Orbán to rule by decree, postponing by-elections and national and local referendums, and curtailing public scrutiny by making the spreading of ‘misleading information’ about the government’s pandemic response punishable by up to five years in prison. Although the special powers to rule by decree were phased out in June, some emergency regulations remain in place.

A few days after introducing rule by decree, the government cut the funding of political parties by half, under the pretext of reallocating money to the coronavirus responses. The 1.2 billion forints (€3.42 million) reallocated is little compared to the budget of the crisis funds, but it effectively hinders the operation of opposition parties that overwhelmingly rely on state funding as a source of revenue. Bolstered by their oligarchs and the political use of governmental resources, this cut does not affect Fidesz. The central government also reduced the local governments’ budget by centralising road tax revenues, with further selective punitive financial measurers targeting communities controlled by the opposition (e.g., Göd, Budapest District IX).

How can we interpret the characteristic steps of the Hungarian government to tackle the pandemic? Although it might appear so, the government’s most controversial policies in response to the coronavirus are not merely the product of irrational populist whims or the desire to exclude cultural outgroups. Except for a restrictive wage guarantee scheme and the freezing of loan payments, Orbán’s government has not proposed any new benefits that would go beyond existing ‘workfarist’ social policy.

The mandatory reduction of hospital beds exemplifies the illiberal state’s health policy, which has already reduced health spending significantly since 2010. Public health care spending declined from 5.2 per cent of GDP in 2009, a level already low in international comparison, to 4.7 per cent in 2018. The number of hospital beds has also been reduced by 3000 after 2010. At a recent press conference, the head of the Prime Minister’s Office said, ‘as the coronavirus crisis also highlighted, we have to rethink the health finance … it is unnecessary to maintain hospital capacities that are not justified by the number of patients.’^[26] The health crisis represents a unique opportunity to ‘free up’ further beds that will not be utilised even as the country slowly returns to normal functioning. Such a drastic cut to hospital infrastructure would be otherwise very difficult to push through under normal democratic circumstances.

The policy logic behind the government’s responses to COVID-19 corresponds to the logic of Orbán’s socioeconomic strategy: workfare, social divestment, labour flexibilisation, and redistribution towards the upper-middle class and the national bourgeoisie. Democracy and political competition must be restricted to prevent a backlash from the victims of Viktor Orbán’s illiberal populism. The introduction of ‘military leadership’ in hospitals helped to quell hospital directors’ dissent against the drastic cuts to hospital beds. The curtailment of media freedom and party competition during the health crisis served to pre-empt the politicisation of diffused anger with the government’s unpopular measures.

Conclusions

What are the takeaways of Hungary’s descent into illiberalism? Internationalist neoliberalism, with its focus on human rights and multilateralism, is on the decline globally. However, its alternative is not a post-WW2-type social democratic arrangement. Instead, a new, national-populist neoliberalism is on the rise. Neoliberalism is bifurcating. The rise of national-populists such as Bolsonaro, Trump, or ‘Brexit-Boris’ befits this new wave of national-populist neoliberalism, aptly captured by Reijer Hendrikse’s term neo-illiberalism.

Hungary signifies this tendency, combining neoliberalism with an authoritarian state and nationalism. The decline of democracy and Orbán’s economic strategy are two sides of the same coin. Although an Orbán-style illiberal might not be their first choice, European and transnational economic elites display remarkable flexibility in coming to terms with Hungary’s illiberalism.

The classic internationalist-liberal strategy of naming and shaming populists will not suffice to prevent the rise of this Orbán-type neo-illiberalism. There is nothing inherently anti-illiberal in business elites – some of them support Orbán because he can pose as the sole political voice of domestic business elites while also ensuring transnational investors’ loyalty. There is a role for more liberally minded investors, who have been so far mostly quiet about Hungary’s regime.

However, to fracture the alliance of domestic and global elites and illiberals, progressives also have to change. Instead of embracing the failed model of internationalist neoliberalism, they need to embrace the state as an economic agent. In parallel to reviving rule-based multilateralism, progressives need to embrace economic patriotism and deploy the state as a developmental agent promoting domestic value chains.

However, most importantly, progressives need to earn back the trust of disgruntled workers at the same time. Breaking with internationalist neoliberalism, progressives have to embrace the state as the champion of social cohesion, convincing businesses along the way that inclusive development is their long-term interest also. Only the organised power of the masses can curtail the power of the elites. The solution for nationalist populism is not more neoliberalism. The solution is reinventing the left, a new progressive politics.

Image by Kremlin.ru under (CC).

[1] Hungary – National parliament voting intention, Poll of Polls, Politico, https://www.politico.eu/europe-poll-of-polls/hungary/

[2] Marton Dunai, UPDATE 1 – Hungary arts university protesters defy order to end blockade, Reuters, October 2020, https://www.reuters.com/article/hungary-politics-education-theatre/update-1-hungary-arts-university-protesters-defy-order-to-end-blockade-idUSL8N2H75AS

[3] Scheiring, G. (2020). The Retreat of Liberal Democracy: Authoritarian Capitalism and the Accumulative State in Hungary. Cham: Palgrave Macmillan.

[4] Scheiring, G. (2020). Left Behind in the Hungarian Rustbelt: The Cultural Political Economy of Working-Class Neo-Nationalism. Sociology (Special Issue: Nationalism’s Futures).

[5] World Development Indicators, The World Bank, October 2020, http://data.worldbank.org/data-catalog/world-development-indicators

[6] Employment rate by sex, age group 20-64. Eurostat, October 2020, http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=t2020_10&lang=eng

[7] Pitti, Z. (2010). Economic Performance Contra Social Expectations [In Hungarian]. Budapest: Napvilág Kiadó.

[8] Bohle, D. (2013). Post-socialist housing meets transnational finance: Foreign banks, mortgage lending, and the privatization of welfare in Hungary and Estonia. Review of International Political Economy, 21(4), 913-948.

[9] Enyedi, Z., Fábián, Z., & Tardos, R. (2014). Parties and Voters, 2002-2014 [in Hungarian]. In T. Kolosi & I. G. Tóth (Eds.), Social Report 2014 (pp. 532-556). Budapest: TÁRKI.

[10] Kalb, D. (2019). Post-Socialist Contradictions: The Social Question in Central and Eastern Europe and the Making of the Illiberal Right. In J. Breman, K. Harris, C. K. Lee, & M. van der Linden (Eds.), The Social Question in the Twenty-First Century: A Global View (pp. 208-226). Oakland, CA: University of California Press.

[11] Bohle, D., & Greskovits, B. (2012). Capitalist diversity on Europe’s periphery. New York: Cornell University Press.

[12] Scheiring, G. (2019). Dependent development and authoritarian state capitalism: Democratic backsliding and the rise of the accumulative state in Hungary. Geoforum, Published online: 5 September 2019.

[13] Szabó, A., & Gerő, M. (2019). Hungarian society and politics 2019: Political attitudes, integration and participation [In Hungarian]. Budapest: Centre for Social Sciences, Hungarian Academy of Sciences.

[14] Scheiring, G. (2018). Lessons from the Political Economy of Authoritarian Capitalism in Hungary. Transnational Institute, Challenging Authoritarianism Series, No 1, April 2018. Amsterdam.

[15] Simon Book, Deutsche Firmen in Osteuropa: Geschäfte machen beim Europafeind, WirtschaftsWoche, wiwo.de, January 2018, https://www.wiwo.de/my/politik/europa/deutsche-firmen-in-osteuropa-geschaefte-machen-beim-europafeind/20903608.html

[16] Scheiring, G. (2020). Orbanomics: A polarising answer to the crisis of liberal dependent capitalism. Friedrich Ebert Stiftung. Budapest.

[17] Gini coefficient of equivalised disposable income. EU-SILC survey, Eurostat, October 2020, https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=ilc_di12&lang=en

[18] Data of total households by deciles, regions and type of settlements, Hungarian Central Statistical Office, http://www.ksh.hu/docs/eng/xstadat/xstadat_annual/i_zhc014a.html

[19] MNB. (2017). Financial assets of households based on micro-and macrostatistical data [In Hungarian]. Magyar Nemzeti Bank Statisztikai Igazgatóság. Budapest.

[20] Gabor Scheiring & Kristof Szombati, The structural trap of labour politics in Hungary, Rupture Magazine, August 2019, https://rupturemagazine.org/2019/08/04/the-structural-trap-of-labour-politics-in-hungary-gabor-scheiring-kristof-szombati/

[21] Gabor Scheiring, Hungarian opposition takes a crucial step, but still a long way to go for the left, The Foreign Policy Centre, October 2019, https://fpc.org.uk/hungarian-opposition-takes-a-crucial-step-but-still-a-long-way-to-go-for-the-left/

[22] Bíró Nagy, A., & Laki, G. (2020). Orbán 10: The last decade in the eyes of Hungarian society [In Hungarian]. Friedrich Ebert Stiftung & Policy Solutions. Budapest.

[23] How central and eastern Europe contained coronavirus, Financial Times, April 2020, https://www.ft.com/content/f9850a8d-7323-4de5-93ed-9ecda7f6de1c

[24] This was reduced to 50 per cent a few days later – while reaching 60 per cent was postponed to an indefinite second phase.

[25] Laszlo Bruszt, Labor Rights in the Time of Pandemic: Hungary’s return to the 19th Century in response to Covid 19, Public Seminar, March 2020, https://publicseminar.org/essays/labor-rights-in-the-time-of-pandemic/

[26] Gergely Csiki, The real background of the reduction in hospital beds due to the coronavirus has been revealed, Portfolio, April 2020, https://www.portfolio.hu/gazdasag/20200423/kiderult-a-koronavirus-miatti-korhazi-agyszamcsokkentes-valodi-hattere-427870

Topics

Covid-19

Democracy and Elections

Good Governance and Institutional Reform

Regions

Europe

Hungary

The Safety of Journalists, a Matter of International Human Rights Standards and Soft Law

Article by Silvia Chocarro

November 2, 2020

The Safety of Journalists, a Matter of International Human Rights Standards and Soft Law

Let’s be clear: violence against journalists can stop. It ends with accountability. If States fulfill their duty to protect journalists; if States meet their international commitments, journalists will be able to do their jobs freely and safely. International human rights law contains binding obligations to guarantee the safety of journalists. Additionally, in the last ten years there has been an unprecedented increase of international soft law. Implementation and accountability, however, are gaps that must be filled. Do this and the safety of journalists will be guaranteed, along with citizens’ access to the information needed to take decisions about their lives and the future of their democracies.

The right to freedom of expression: A right of all

The right to freedom of expression is protected in Article 19 of the Universal Declaration of Human Rights (UDHR) and Article 19 of the International Covenant on Civil and Political Rights (ICCPR), as well as in regional human right treaties. Article 19 of the ICCPR requires States to guarantee everyone the right to freedom of expression, including the “freedom to seek, receive, or impart information or ideas of any kind”, regardless of frontiers, and through any media of a person’s choice, including online.[1]

While the scope of this right is broad, Article 19(3) provides for its restriction in limited circumstances. States must show that any restriction satisfies a strict three-part test. Restrictions must be provided by law, based on a precisely drafted law, and be accessible, to enable individuals to modify their conduct accordingly; in pursuit of a legitimate aim, as per Article 19(3) for the rights or reputations of others, the protection of national security, public order or public health or morals; and necessary and proportionate, where the state must demonstrate in a specific and individualised fashion the precise nature of the threat, and the necessity and proportionality of the specific action taken, in particular by establishing a direct and immediate connection between the expression and the threat.

The ICCPR contains a number of other obligations relevant to the safety of journalists, including the right to life (Article 6) and the freedom from torture (Article 7). States are also obliged to guarantee individuals’ freedom from arbitrary detention (Article 9) and ensure the right to a fair trial (Article 14). The ICCPR also requires States to guarantee freedom from “arbitrary or unlawful” interference in one’s privacy, of particular importance for protecting journalists’ private communications, their access and use of anonymity and encryption tools.[2] Moreover, it sets out the right of all people to equality and non-discrimination (Article 2), further developed by the Convention on the Elimination of Discrimination against Women (CEDAW) that creates specific obligations for States to end discrimination against women, defined as “any distinction, exclusion or restriction” based on sex characteristics which has the effect or purpose of restricting or negating women’s enjoyment of human rights, such as the right to freedom of expression.[3] Other binding treaties, such as the International Convention on the protection of all persons from enforced disappearance, sets out specific obligations that can address the increasing enforced disappearances of journalists in reprisal for their work.

International Humanitarian Law (IHL), which governs the law of armed conflict, also has a say. Journalists, media professionals and associated personnel are specifically protected by IHL as civilians, provided they take no action adverse to this status. This means that any deliberate attack against a journalist by a party engaged in an armed conflict constitutes a war crime, and those responsible must be brought to account.[4] The Security Council has reaffirmed these obligations through resolutions on the protection of journalists in armed conflict.[5]

The safety of journalists: an increasing matter of soft law

Soft Law is not toothless. International commitments made by States are not empty words and States must be held accountable. In the last ten years alone, a dozen resolutions have been passed in the UN system, including UNESCO, specifically on the safety of journalists. This was not always an issue of particular concern in the UN system. Since the 1970’s, when there were many intense debates about the protection of journalists covering conflict situations,[6] it was not until 2012 when the UN Human Rights Council (HRC) and the UN General Assembly (UNGA) started to pass biennial resolutions on the safety of journalists.[7] 2012 was also the year of the first ever UN strategy: the UN Plan of Action on the Safety of Journalists and the Issue of Impunity.[8] Since 2012, ensuring a safe environment for journalists made its way to two resolutions by the UN Security Council in 2006 and 2012, and to one UNESCO resolution focused on impunity in 1997.[9]

UNESCO, the UN agency with the mandate to promote the right to freedom of expression has also played an increasing role. In 1997, it passed the first resolution focused on impunity on crimes against journalists and asking the UNESCO Director General to condemn the physical attacks against journalists. Since then, there has been a condemnation for every killing of a journalist. This information is collected in the database of the UNESCO Observatory of Killed Journalists.[10] Based on these condemnations, in 2006 UNESCO started to request States to provide information on the judicial inquiries. Information is published in a biennial report on this issue.[11]

At the regional level, intergovernmental organisations have also looked at the protection of journalists. In Europe, for example, the Council of Europe (CoE) adopted a very comprehensive Recommendation on the protection of journalism and safety of journalists and other media actors[12] and an implementation guide that provides guidance and examples on how to translate into action what is agreed on paper.[13] Almost tens year earlier, the CoE had adopted a declaration specifically on the protection and promotion of investigative journalism “convinced that the essential function of the media as public watchdog and as part of the system of checks and balances in a democracy would be severely crippled without promoting such investigative journalism.”[14] In 2018, the Organization for Security and Co-operation in Europe (OSCE) also passed a Decision on the safety of journalists recognising the importance of investigative journalism and that the ability of the media to investigate “without fear of reprisal, can play an important role in our societies, including in holding public institutions and officials accountable.”[15]

All of these texts have increasingly included additional aspects and nuances on the issue of the safety of journalists. While at the beginning concerns were around physical safety and impunity, resolutions have increasingly recognized the importance of legal, digital and psychological protection, as well as the need to approach the problem with a gender lens, among other considerations. Behind these improvements, there are also years of work by civil society groups, journalists’ associations and media to collect and analyse data to be used for evidence-based advocacy in the international sphere.

So, what have States committed to?

Resolutions on the safety of journalists commit States, based on their existing international human rights law obligations, to act on three fronts: prevention, protection and prosecution and remedy, as follows: [16]

Prevention:

Create and maintain a free and safe enabling environment for journalists, media workers and civil society, as they play a vital role enhancing the safety of journalists;
Condemn all attacks against journalists and the prevailing impunity;
Refrain from denigrating, intimidating or threatening the media and journalists, or using misogynist language towards women journalists, that undermining trust in media;
Ensure national laws, policies and practices are fully in compliance with obligations under international human rights law and do not interfere with journalists’ independence;
Refrain from the misuse of overbroad or vague laws to repress legitimate expression, including defamation and libel laws, laws on misinformation and disinformation or counter-terrorism and counter-extremism legislation as well;
Ensure business entities and individuals are not using strategic lawsuits against public participation to exercise pressure on journalists;
Cease to and refrain from intentionally preventing or disrupting access to or dissemination of information offline and online;
Respect freedom of journalists to have access to information held by public authorities.

Protection:

Establish early warning and rapid response mechanisms against threats;
Take measures to address sexual harassment and other forms of sexual and gender-based violence;
Protect journalists, in particular those covering protests and elections;
Allow encryption and anonymity and refrain from employing unlawful or arbitrary surveillance techniques;
Protect journalists’ confidential sources;
Enhance information-gathering and monitoring mechanisms, also those by civil society.

Prosecution and remedy:

Ensure the conduct of impartial, prompt, thorough, independent and effective investigations into all alleged violence, threats and attacks;
Create special investigative units or independent commissions, and consider appointing a special prosecutor;
Adopt specific gender-sensitive protocols and methods of investigation and prosecution;
Support capacity-building, training and awareness-raising in the judiciary and among law enforcement officers and military and security personnel on international standards and commitments related to freedom of expression and the safety of journalists;
Ensure that victims and their families have access to appropriate restitution, compensation and assistanc

And who is a journalist after all?

One of the controversies that led to the fail attempt by the UN to pass a resolution on the safety of journalists in the seventies was the definition of a journalist. In 2011, the Human Rights Committee, a quasi-judicial body consisting of 18 independent human rights experts elected by UN member states responsible for providing guidance on States’ obligations under the ICCPR, shed light on this particular matter.[17] It describes ‘journalism’ as a function shared by a wide range of actors, including bloggers and others who self-publish information online or offline, avoiding a restrictive or formal definition of who deserves protection as a journalist, and making clear that schemes for registering or licensing of journalists are incompatible with States’ obligations.

In conclusion, the risks and attacks identified in this report are happening because States are not fulfilling their obligations and commitments. In many cases, governments or public officials are behind it. The more we know about international standards and commitments, the more we can hold governments accountable. The more we know, the more we can ensure the safety of journalists and the smooth functioning of our democracies, because without journalism there can be no democracy.

Silvia Chocarro is Head of Protection at ARTICLE 19. @silviachocarro

Cover image, with changes under CC.

[1] International Covenant on Civil and Political Rights, 1966, Art.19, https://www.ohchr.org/en/professionalinterest/pages/ccpr.aspx#:~:text=Article%2019&text=Everyone%20shall%20have%20the%20right,other%20media%20of%20his%20choice.

[2] ARTICLE 19, Ending Impunity. Acting on UN Standards on the Safety of Journalists, November 2019, https://www.article19.org/wp-content/uploads/2019/11/SOJ-Web.pdf

[3] ARTICLE 19, Freedom of Expression and Women’s Equality, Ensuring Comprehensive Rights Protection, October 2020, https://www.article19.org/wp-content/uploads/2020/10/Gender-Paper-Brief-1.pdf

[4] International Committee of the Red Cross. Customary International Humanitarian law, Rule 34, Journalists, https://ihl-databases.icrc.org/customary-ihl/eng/docs/v1_rul_rule34

[5] UN Security Council. Resolution 1738 on Protection of Civilians in Armed Conflict (S/RES/1738), 2006, https://undocs.org/S/RES/1738(2006) & UN Security Council, Resolution 2222 on Protection of Journalists and the Issue of Impunity (S/RES/2222), 2015, https://undocs.org/S/RES/2222(2015)

[6] Chocarro, Silvia. The United Nations’ Role in Promoting the Safety of Journalists from 1945 to 2016. In The Assault on Journalism. Building Knowledge to Protect Freedom of Expression. Edited by Ulla Carlsson and Reeta Pöyhtäri. Nodicom. Gothenburg, 2017 Page 45-61 https://www.nordicom.gu.se/sv/system/tdf/publikationer-hela-pdf/the_assault_on_journalism.pdf?file=1&type=node&id=38302&force=0

[7] UNESCO, Basic Texts Related to the Safety of Journalists, https://en.unesco.org/themes/safety-journalists/basic-texts

[8] UNESCO, UN Plan of Action on The Safety of Journalists, 2012, https://en.unesco.org/un-plan-action-safety-journalists

[9] UNESCO, Resolution 29 on Condemnation of Violence against Journalists, 1997, https://en.unesco.org/sites/default/files/ipdc_resolution_29.pdf

[10] UNESCO, Observatory of Killed Journalists, 2018, https://en.unesco.org/themes/safety-journalists/observatory

[11] UNESCO Director-General Report on the Safety of Journalists and the Danger of Impunity, 2020, https://en.unesco.org/themes/safety-journalists/dgreport/2020

[12] Council of Europe. Recommendation CM/Rec(2016)4 of the Committee of Ministers to member States
on the protection of journalism and safety of journalists and other media actors, 2016, https://search.coe.int/cm/Pages/result_details.aspx?ObjectId=09000016806415d9#_ftn1

[13] Council of Europe. Implementation Guide to Recommendation CM/Rec(2016)4 on the Protection of journalism and safety of journalists and other media actors, 2020, https://rm.coe.int/safety-implementation-guide-en-16-june-2020/16809ebc7c

[14] Declaration Decl-26.09.2007 by the Committee of Ministers on the protection and promotion of investigative journalism, 2007, https://rm.coe.int/1680645b44

[15] OSCE, Decision No. 3/18 on the Safety of Journalists, 2018, https://www.osce.org/files/mcdec0003%20safety%20of%20journalists%20en.pdf

[16] This is a selection of commitments, mainly from HRC resolutions.

[17] UN Human Rights Committee, General Comment No. 34 on Article 19: Freedoms of Opinion and Expression (CCPR/C/ GC/34), 2011, https://www2.ohchr.org/english/bodies/hrc/docs/GC34.pdf

Topics

Investigative journalism

Media and Online Freedom

SLAPPs

Regions

Europe

United Kingdom

Political unrest in Kyrgyzstan: between old and new hopes

Article by Saipira Furstenberg and Gulzat Botoeva

October 16, 2020

Political unrest in Kyrgyzstan: between old and new hopes

Since October 4^th, Kyrgyzstan has been shaken by a wave of unprecedented protests triggered by rigged parliamentary elections.[1]

The country plunged in political turmoil with various divided political forces fighting for power and supporters.

On October 4^th, 16 parties stood in the parliamentary election, only four parties passed the seven per cent threshold for entry into parliament. Although Kyrgyzstan has established a plural parliamentary party system, in reality powerful leaders are able to use this system to advance their own agenda. The two leading parties were Birimdik and Mekenim Kyrgyzstan, both have close ties with the current President and are connected to the powerful group leaders. The President’s younger brother, Asylbek Jeenbekov, is a member of Birimdik. Meanwhile, the powerful Matraimov family, who were the target of a high-profile corruption scandal[2] last year, supports Mekenim.[3]

On Monday 5^th October, 12 opposition parties jointly declared that they would not recognise the results of the vote as the winning parties have either abused administrative resources or bought the votes.[4] Following the election results, peaceful protests that started in Bishkek have turned into a battle between the protesters and the law enforcement agencies. During the first night, the riot police used rubber bullets and tear gas to disperse the crowds of people. According to the Health Minister’s official data, one person was killed and at least 686 injured during that night.[5] By three am on October 6^th, the presidential building had been taken by the protesters.[6] Some of them then freed several politicians from prison including former President Almazbek Atambayev, former Prime Minister Sapar Isakov and Sadyr Japarov. The political unrest in the country forced the Central Election Commission to cancel the election results and have prompted the resignation of Prime Minister Kubatbek Boronov and his cabinet.[7] Jeenbekov also offered to resign once a date for fresh elections had been set and parliament and his office had confirmed changes in government.[8]

In the next few days, as the President of the country went into hiding, the opposition factions made grabs for power.[9] While some attempted to seize administrative seats in the Government, others have tried to resolve the power vacuum legitimately by either impeaching the President or appointing a new Prime Minister through the Parliament. However, this proved to be a challenging task. The first time MPs gathered to appoint Sadyr Japarov as the Interim Prime Minister of the country. However, it was considered illegitimate due to procedural issues of having no quorum.[10]

The second time, while discussing impeachment of Jeenbekov, some of the MPs had left, without reaching the necessary number of votes to pass the motion.[11] When the leaders of the extra-parliamentary opposition finally made the decision to designate Omurbek Babanov for the post of Interim Prime Minister, Japarov and his supporters had already snatched the power from the opposition by resorting to violence and intimidation.[12]

On October 9^th, peaceful protests led by Babanov (joined by Atambyev) were attacked on the Ala-Too square by Japarov and his supporters.[13] Although most people were assaulted by stones and bottles, there was one gunshot towards the car of Atambayev. On October 10^th, in an extraordinary session, thehas voted to appoint Sadyr Japarov, as the country’s Prime Minister. This time, Japarov secured the backing of the ruling coalition with more than 80 lawmakers from the 120 legislators of the parliament attending the extraordinary session.[14] In the meantime, the political vacuum in the country has created tensions in other cities. Throughout the country, many coal and gold mines were attacked, looted and equipment destroyed in the first couple of days of the protests. As more people travelled from other regions to Bishkek, it created fear among the city dwellers. Starting from October 6^th, residents and activists of the city have formed vigilante groups (druzhinniki) to deter any possible looters that accompanied previous uprisings.[15]

The current protests in Kyrgyzstan also bring disconcerting flashbacks on the wave of protests that took place in 2005 and 2010. In 2005, the Tulip Revolution led to the ousting of the Askar Akayev’s fall from power. The revolutionaries alleged corruption and authoritarianism by Akayev, his family and supporters. When Kurmanbek Bakiyev became Kyrgyzstan’s head of state the promises of democratic change and reforms quickly faded away to give space to corruption and cronyism. Five years later he was overthrown by what is known as the ‘April Revolution’. Bakiyev’s removal from power was bloody and were followed by violent and deadly ethnic clashes in the south of the country.

Although the recent protests are also about the same issues of corruption, political nepotism, and deteriorating economy, there are differences between the past and the current political unrests.

First, this year’s protests are taking place against the background of the COVID-19 pandemic, which has exacerbated economic crisis and ravaged the country’s healthcare system.[16] The Government’s handling of the pandemic left citizens in anger and disarray. The pandemic was largely eased by the help of local volunteers who filled the Government’s gaps in dealing with the crisis in the country of 6.5 million people.[17] During the pandemic there was a huge grassroot movement to help people left out of the healthcare system with transportation and medicine, led by younger generation of Kyrgyz citizens.

Secondly, the organisation of protests has changed in comparison to previous years. The advancements in communication and media have helped the protestors to organise collective action. The proliferation of rapid information through media and social media channels such as YouTube, Telegram and Facebook, has made it easier for individuals to share updates and deploy rapid mobilisation. Additionally, as explained by the anthropologist, Aksana Ismailbekova: ‘the role of media has been important not only in allowing people to share information with each other, but allowing previously marginalized groups to participate in the conversation’.[18]

Third, and perhaps the most significant change, is that this year’s protests have been led by a younger generation of activists who demanded ‘old corrupt politicians’ to stay away from the Government. Most of these activists have taken part in grassroot activities since July 2020 amid the pandemic and then have made decisions to run the parliamentary elections with some of the pro-reform parties. The parties that have not gone through the seven per cent threshold.

Fourth, in contrast to the previous protests, the opposition factions were not united as it happened in 2005 and 2010.[19] Before October 9^th, the opposition led by pro-reformist parties (Respublika, Ata Meken, Bir Bol, Reforma) could not agree on the main candidate for temporary Prime Minister to form the provisional government before the next election.

Fifth, the role of organised crimes in the country backing politician has been a prominent feature of the country’s past and current political upheavals. In some cases, state-crime relations are so entangled that it is difficult to distinguish between them[20]. Already during the first Revolution in 2005, the role of several key influential criminals in organizing and financing anti-Akaev demonstrations was apparent. Criminal groups were also involved in June 2010 inter-ethnic clashes in Osh[21]. The state-crime relations reached unprecedented levels during Bakiyev’s time when prominent organised groups had infiltrated the political establishment by having seats in the parliament and government[22].

During Atambayev’s presidency, there was not such a direct connection between organised criminal groups and the state. However, it was under his ruling that underground contraband economy and money laundering was established. Some official state representatives (Matraimov for instance was a deputy head of the State Customs Service) by forming allies with the trading business between China and Kyrgyzstan, other Central Asian countries, have developed an underground economy that have led to loss of huge amount of money in the state budget. But it was during Jeenbekov’s presidency that these groups have co-opted the government to secure the smooth running of their business operations. In the current context, it is suggested that Japarov has become connected to the Matraimov’s family, one of the wealthiest and most powerful families in Kyrgyzstan. It was the Deputy speaker Mirlan Bakirov, a member of Mekenim (My Homeland), a party allegedly funded by Rayimbek Matraimov who proposed Japarov for the role of prime minister[23]. Additionally, some MPs accuse Japarov to be connected with Kamchibek Kolbaev one of the country’s most notorious criminal leader. Several lawmakers reported that they have been threatened by the Kolbayev’s criminal group[24].

As of Wednesday 14^th October, the President has ratified the parliamentary vote, which makes the appointment of Sadyr Japarov to the post of Prime Minister official.[25] Although Japarov’s candidacy and its legitimacy is contested by the international community, lawmakers and internal factions, its appointment sets Kyrgyzstan to an uncertain path. Sadyr Japarov is a former adviser to former President Kurmanbek Bakiyev and a fervent nationalist.[26] His previous political demands for nationalisation of ‘Kumtor,’ one of the largest gold mines in the country, are now uniting many people from rural regions from both north and south to fight foreign influence in the extractive sector and gain ownership over natural resources .[27] In the these past few years, nationalist and anti-foreign narratives have become useful tools for country’s politicians to gather supporters.

Yet despite these uncertainties, what the current political turmoil demonstrates, is that we should not underestimate the role of youth movements in organising political upheavals. The young generation in Kyrgyzstan involved in politics of the country has a specific policy agenda which runs through formal party structures[28]. Many of them aspire to improve political governance in the country.

The unreliability of the state to provide for its people, drove the population to rely on themselves and their community. As a result of systematic political crisis, independent and self-organised youth led networks have emerged offering alternative forms of governance which fulfil the services provided by the state. The failure of the state to adequately perform its self-defined function and respond to the needs of the population seeded autonomous social values and activism. As the regional analyst Erica Marat notes: “with every cycle of political turmoil and government dysfunction, civic networks only grow stronger”.[29]

While it is still not clear who is in charge of the country, following Jeenbekov’s resignation on Thursday 15^th of October, one thing is certain: the Kyrgyz population is in search for its political identity and has divergent views on the country’s governance.

Saipira Furstenberg, University of Exeter– is currently affiliated with the University of Exeter as a research associate. She previously taught politics modules at Oxford Brookes University. Her research interests are in post-Soviet region of Central Asia, extra-territorial politics, international dimensions of democracy and global governance.

Gulzat Botoeva, University of Roehampton – is a Senior Lecturer in Criminology at the University of Roehampton. She is a sociologist working on topics of illegal and informal economies (drug production, illegal gold mining and illegal monies) in a post-Soviet context. She has published with Theoretical Criminology, The International Journal of Drug Policy, and Central Asian Survey journals.

Image by Izvestia under (CC).

[1] Colleen Wood, Is This the Beginning of Kyrgyzstan’s Next Revolution? Foreign Policy, October 2020, https://foreignpolicy.com/2020/10/07/beginning-kyrgyzstan-next-revolution-election-protests-bishkek/

[2] OCCRP,The Matraimov Kingdom, OCCRP October 2020, https://www.occrp.org/en/the-matraimov-kingdom/

[3] RFE/RL, OCCRP, and Kloop, Plunder And Patronage In The Heart of Central Asia, RadioFreeEurope RadioLiberty, November 2019 (Update June 2020), https://www.rferl.org/a/30284703.html

[4] Bruce Pannier, Backlash Against Kyrgyz Parliamentary Election Results Comes Instantly, RFE/RL, October 2020, https://www.rferl.org/a/backlash-against-kyrgyz-parliamentary-election-results-comes-instantly/30876459.html

[5] Facebook Post, October 2020, https://www.facebook.com/minzdravKR/posts/3360992854020014

[6] Agencies, Kyrgyzstan protesters storm parliamentary building over election result, The Guardian, October 2020, https://www.theguardian.com/world/2020/oct/05/kyrgyzstan-election-120-taken-to-hospital-following-result-protest

[7] RFE/RL’s Kyrgyz Service, Kyrgyzstan Annuls Results Of Parliamentary Elections After Night Of Deadly Protests, RFE/RL, October 2020, https://www.rferl.org/a/building-housing-kyrgyz-parliament-president-s-office-catches-fire-after-day-of-protests/30877477.html#:~:text=BISHKEK%20%2D%2D%20Kyrgyzstan%20plunged%20into,Jeenbekov%20described%20as%20a%20coup

[8] President of the Kyrgyz Republic, October 2020, http://www.president.kg/ru/sobytiya/novosti/17973_prezident_sooronbay_gheenbekov__kak_tolko_strana_vstanet_na_put_zakonnosti_gotov_uyti_s_posta_prezidenta_kirgizskoy_respubliki

[9] Kyrgyzstan’s President Jeenbekov ‘ready to resign’, TRT World, October 2020, https://www.trtworld.com/asia/kyrgyzstan-s-president-jeenbekov-ready-to-resign-40408

[10] Kyrgyz parliament votes to appoint Sadyr Japarov as prime minister, Tass, October 2020, https://tass.com/world/1209355

[11] RFE/RL’s Kyrgyz Service, Kyrgyz President Holds Talks With Lawmakers On Crisis, Impeachment, RFE/RL, October 2020, https://www.rferl.org/a/kyrgyz-president-warns-of-political-vacuum-as-rival-opposition-parties-struggle-amid-protests/30881629.html; Four parties nominate Babanov as prime minister, KABAR, October 2020, http://en.kabar.kg/news/four-parties-nominate-babanov-as-prime-minister/

[12] Ayzirek Imanaliyeva and Peter Leonard, Kyrgyzstan: Police and protesters clash in post-election melee, Eurasianet, October 2020, https://eurasianet.org/kyrgyzstan-police-and-protesters-clash-in-post-election-melee

[13] Peter Leonard, Kyrgyzstan: Politician’s mob rampage draws army onto the streets, Eurasianet, October 2020, https://eurasianet.org/kyrgyzstan-politicians-mob-rampage-draws-army-onto-the-streets

[14] DW, Парламент Киргизии повторно избрал премьером Садыра Жапарова, October 2020, https://www.dw.com/ru/parlament-kirgizii-vtorichno-izbral-premerom-sadyra-zhaparova/a-55273645

[15] Tatiana Shvacheva, People’s guards are being set up in Bishkek, YouTube, October 2020, https://www.youtube.com/watch?v=8FHM6C-pdPs&feature=emb_logo&ab_channel=%D0%A2%D0%B0%D1%82%D1%8C%D1%8F%D0%BD%D0%B0%D0%A8%D0%B2%D0%B0%D1%87%D0%B5%D0%B2%D0%B0

[16] Kamila Eshaliyeva, Is Kyrgyzstan losing the fight against coronavirus?, openDemocracy, July 2020, https://www.opendemocracy.net/en/odr/kyrgyzstan-losing-fight-against-coronavirus/

[17] Daria Litvinova, Volunteers came to the rescue as virus raged in Kyrgyzstan, AP News, July 2020, https://apnews.com/article/kyrgyzstan-ap-top-news-understanding-the-outbreak-international-news-photography-08aee6d2f32ba0eca8f5b3ae88b49fd5

[18] Aksana Ismailbekova, Intergenerational Conflict at the Core of Kyrgyzstan’s Turmoil, The Diplomat, October 2020, https://thediplomat.com/2020/10/intergenerational-conflict-at-the-core-of-kyrgyzstans-turmoil/

[19] Bruce Pannier, Is a hidden power in Kyrgyzstan undermining the opposition’s drive for change?, October 2020, https://rus.azattyq.org/a/a-hidden-force-in-kyrgyzstan-hijacks-the-opposition-s-push-for-big-changes/30892873.html

[20] Erica Marat, Kyrgyz Government Attempts to Crack Down on Organized Crime, Eurasia Daily Monitor Volume: 8 Issue: 40, February 2011, https://jamestown.org/program/kyrgyz-government-attempts-to-crack-down-on-organized-crime/

[21] Eurasianet, What Role Did Crime Kingpins Play in Southern Kyrgyzstan’s Violence?, July 2010, https://eurasianet.org/what-role-did-crime-kingpins-play-in-southern-kyrgyzstans-violence

[22] Erik Leijonmarck & Camilla Asyrankulova, The Role of Organized Crime and Drug Trafficking in Kyrgyzstan’s Ethnic Crisis, Policy Brief No. 39, October 2010, https://isdp.eu/content/uploads/images/stories/isdp-main-pdf/2010_leijonmarck-asyrankulova_the-role-of-organized-crime.pdf

[23] Agnieszka Pikulicka-Wilczewska, Who is Kyrgyzstan’s new prime minister, Sadyr Japarov?, Aljazeera, October 2020, https://www.aljazeera.com/news/2020/10/15/who-is-kyrgyzstans-new-prime-minister-sadyr-japarov

[24] OCCRP, Kyrgyz MPs say Organized Crime Installed New Prime Minister, October 2020, https://www.occrp.org/en/daily/13223-kyrgyz-mps-say-organized-crime-installed-new-prime-minister

[25] Kyrgyzstan election: President accepts new prime minister, BBC News, October 2020, https://www.bbc.com/news/world-asia-54534474

[26] Aida Kasymalieva about what happened in the state residence and who gave commands to the deputies, Kaktus Media, October 2020, https://kaktus.media/doc/423280_aida_kasymalieva_o_tom_chto_proishodilo_v_gosrezidencii_i_kto_daval_komandy_depytatam.html; Ayzirek Imanaliyeva, Kyrgyzstan: Former convict appointed prime minister, Eurasianet, October 2020, https://eurasianet.org/kyrgyzstan-former-convict-appointed-prime-minister

[27] Niva Yau and Dirk van der Kley, The Growth, Adaptation and Limitations of Chinese Private Security Companies in Central Asia, The OXUS Society, October 2020, https://oxussociety.org/the-growth-adaptation-and-limitations-of-chinese-private-security-companies-in-central-asia/

[28] Eurasianet, Kyrgyzstan: Does parliament have room for reform?, September 2020, https://eurasianet.org/kyrgyzstan-does-parliament-have-room-for-reform

[29] Erica Marat, The incredible resilience of Kyrgyzstan, openDemocracy, October 2020, https://www.opendemocracy.net/en/odr/incredible-resilience-kyrgyzstan/

Topics

Civil Society

Democracy and Elections

Freedom of Expression

Regions

Former Soviet Union

Central Asia

Kyrgyzstan

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